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D'Leon Inc. Part I

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Integrated Case 3-16 D¡¦Leon Inc., Part I Financial Statements and Taxes Donna Jamison, a 2000 graduate of the University of Florida with 4 years of banking experience, was recently brought in as assistant to the chairman of the board of D¡¦Leon Inc., a small food producer that operates in north Florida and whose specialty is high-quality pecan and other nut products sold in the snack-foods market. D¡¦Leon¡¦s president, Al Watkins, decided in 2004 to undertake a major expansion and to ¡§go national¡¨ in competition with Frito-Lay, Eagle, and other major snack-food companies. Watkins felt that D¡¦Leon¡¦s products were of a higher quality than the competition¡¦s; that this quality differential would enable it to charge a premium …show more content…

What effect did the expansion have on sales, NOPAT, net operating working capital (NOWC), total operating capital, and net income? Answer: [S3-1 through S3-9 provide background information. Then show S3 10 through S3-14 here.] Sales increased by $2,602,000. NOPAT05 = EBIT(1 ¡V Tax rate) = (-$130,948)(0.6) = ($78,569). NOPAT04 = $190,428(0.6) = $114,257. ƒ´NOPAT = ($78,569) ¡V $114,257 = ($192,826). NOPAT decreased by $192,826. NOWC05 = ¡V = ($7,282 + $632,160 + $1,287,360) ¡V ($524,160 + $489,600) = $913,042. NOWC04 = ($57,600 + $351,200 + $715,200) ¡V ($145,600 + $136,000) = $842,400. ƒ´NOWC = $913,042 ¡V $842,400 = $70,642. Net operating working capital increased by $70,642. OC05 = + = $913,042 + $939,790 =

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