Genmo Corporation Financial Statements (thousands of dollars) — the night February 2012 certain records were accidentally destroyed fire Two days

On the night of February 27, 2012, certain records of the Genmo Corporation were accidentally destroyed by fire. Two days after that, the principal owner had an appointment with an investor to discuss the possible sale of the company. The owner needed as much information as could be gathered for this purpose, recognizing that over a longer period of time a more complete reconstruction would be possible.

EXHIBIT 1

Genmo Corporation Financial Statements (thousands of dollars)

EXHIBIT 2

Selected Ratios

Questions

1. Prepare a balance sheet as of December 31, 2011, and the 2011 income statement.

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Exhibit A GENMO CORPORATION Balance Sheet as of December 31, 2010
Line	Assets
1.	Cash and marketable securities		$ 416
2.	Accounts receivable		1,117
3.	Subtotal: quick assets		1,533
4.	Inventories		872
5.	Prepaid expenses		273
6.	Total current assets		2,678
7.	Noncurrent assets		4,524
8.	Total assets		$7,202
	Liabilities and Equity
9.	Current liabilities		$2,285
10.	Noncurrent liabilities	$1,885
11.	Shareholders’ equity	3,032
12.	Total invested capital		4,917
13.	Total liabilities and shareholders’ equity		$7,202
Income Statement, 2010
14.	Revenues		$10,281
15.	Cost of sales		8,727
16.	Gross margin		1,554
17.	Other expense		1,263
18.	Net Income		$ 291

Notes
Line
1.	Line 3 - line 2
2.	Revenue (10,281) * days’ receivables (39.66) / 365
3.	Current liabilities (2,285) * quick ratio (0.671)
4.	Cost of sales (line 15) inventory turnover (10.005)
5.	Line 6 - (line 3 + line 4)
6.	Current liabilities (2,285) * current ratio (1.172)
7.	Line 8 - line 6
8.	Same as line 13
9.	Given
10.	Let debt = X; then X (4,917 - X) = 0.6215 (debt/equity). Solving, X = 1,885. (The 4,917 comes from line 12.)
11.	Line 12 - line 10
12.	Revenues (10,281) / invested capital turnover (2.091)
13.	Line 9 + line 12
14.	Given
15.	Line 14 - line 16
16.	Revenues (10,281) * gross margin percentage (0.1512)
17.	Line 16- line 18
18.	Revenue (10,281)* profit margin percentage (0.02831)

Genmo Corporation Financial Statements (thousands of dollars) — the night February 2012 certain records were accidentally destroyed fire Two days

EXHIBIT 1

EXHIBIT 2

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SOLUTION