Play Time Toy Co

1. Using the historical data as a guide, construct a pro forma (forecasted) profit and loss statement

The purpose of this memo is to document and evaluate the business risks faced by Toy Central Corporation (TCC), as well as audit risks, accounting issues identified, and management assertions affected.

4. What inventory method is used to value inventories? Does this method reflect current cost at year-end?

Shakespeare’s management uses $10 m from the modified line of credit to acquire Hamlet, a competitor publishing company. Management’s best estimate of the allocation of the $10 million purchase is as follows: $2 million of current assets and $8 million noncurrent assets (comprising $5 million of identifiable noncurrent assets, $2 million of intangible assets, and $1 million of goodwill). Hamlet’s prior-year

Loan and Interest Payment to Bank based on remainder needed to cover costs and ensure an adequate supply of cash on hand which was calculated from the Average Percentage of Cash for $240,000 worth of inventory from Study F.

2. Forecast the firm’s financial statements for 2002 and 2003. What will be the external financing requirements of the firm in those years? Can the firm repay its loan within a reasonable period? In order to forecast the financial statements of 2002 and 2003, the following assumptions need to be made. The growth of sales is 15%, same as 2001, which is estimated by managers. The rate of production costs and expenses per sales is constant to 50%. Administration and selling expenses is the average of last 4 years. The depreciation is $7.8 million per year, which is calculated by $54.6 million divided by 7 years. Tax rate is 24.5%, which is provided. The dividend is $2 million per year only when the company makes profits. Therefore, we assume that there will be no dividend in 2003. Gross PPE will be $27.3 million (54.6/2) per year. We also assume there is no more long term debt, because any funds need in the case are short term debt, it keeps at $18.2 million. According to the forecast, Star River needs external financing approximately $94 million and $107 million in 2002 and 2003, respectively. In order to analysis if the company can repay the debt, we need to know the interest coverage ratio, current ratio and D/E ratio. The interest coverage ratios through the forecast were 1.23 and 0.87 respectively, which is the danger signal to the managers, because in 2003, the profits even not

(Note: retained earnings information is irrelevant here) Part b. Total market value = debt + pref. equity + Common equity = 1,147,200 + 1,250,000 + 2,500,000 = $4,897,200

In vertical analysis, it is easier to see elements as a percentage of Revenue. Between 2011-12, the portion that cost of sales takes in revenue has increased however, there is a bigger deterioration in distribution cost. In 2011, 9.21% of revenue remains as profit but in 2012 this figure decreases to 8.14%. Despite reduction in costs is one of the strategies of Ted Baker(part 1.4), analysis illustrates that costs increase each year.

For our pro forma, we first began with the income statement. To determine Sales, we assumed an increase at a consistent rate each year. COGS and operating expenses were estimated as a percentage of Sales. Exceptional Costs and Restructuring Costs were not considered since pro forma statements exclude unusual and nonrecurring transactions. With these figures, we were able to determine our Profit Before Tax (PBT). For our tax expense, we assumed a constant tax rate. By subtracting the Tax Expense from our PBT we determined the Profit/(loss) After Tax. Lastly, we subtracted dividends, which remained unchanged each year, from the Profit/(loss) After Tax to find the company’s Retained Earnings. Below is a diagram illustrating these steps:

From Figure 1, we know that the critical path is Activity 1-2-5-7-10-13-15. It is because if there is any change of time in the Activities on the critical path, the whole progress time of the project will change. Therefore, we choose to crash the activities on the critical path with the lowest crash cost in order to lower the time used with minimum additional cost. Activity 7 has the lowest crash cost within the Activities on the critical path. So, we choose to crash Activity 7 first.

This report is about the situational analysis of the Toy R US Company. This company is currently facing some drop in sales, possible reasons and potential solutions are provided in this report. All the detailed analysis are given here. Report has suggested that company lost its main perspective which it famous at the first point. This is main outcome of the report. There are many other reasons as well which are causing the decline of the company. There is a lot of room for improvement which can be tackled, implementation plan is also given in this report along with the possible and potential full recommendations. So lets’ start with the report.

Toy World, Inc. is a fairly healthy toy manufacturing business that is looking at a cross roads in it 's main operating procedure. Jack McClintock is President and partial owner of Toy World. His new production manager, Dan Hoffman, has been on the job through one business cycle (about one year). This toy business is a seasonal business with most of the sales coming between August and December. Since its inception Toy World has followed a seasonal production schedule to match customer demand.

In FY 2014, ratio augmented by 2.8 days as compared to FY 2013 due to decrease in cost of sales and increase in average inventory. Cost of sales reduced by Rs 2,010.7 million primarily because of reduction in fuel prices and the fact company imported

I have included the firm's original income statement and balance sheet without the purchase and then with the machine purchase. I have assumed that the firm would use the $218,000 to reduce the bank loans balance for each year. This reduction of the bank loan balance will lower their three restrictive financial ratios.

The finance department will also monitor levels of lost and outdated inventory to make sure that the levels don’t become too high. They need to write off this inventory but has to make sure that it isn’t excessive. Finance people also monitor the counts or physical inventories in order to reconcile what is actually on hand with what has been recorded in the company’s records. The finance department does not manage the inventory personally but it does have to make sure that the people