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Income Statement
Net Sales = $50,000,000
Cost of Goods sold =$9,000,000
Net Income = $5,486,000
Gross Profit= $41,000,000
Balance Sheet Key figures:
Gross Receivables= $33,000,000
Net Inventory = $32,000,000
Total Debt= $94,900,000
Total Equity= $141,000,000
Current Assets $202,020,000
Current Liabilities= $37,500,000
Ratio
Formula
(express the
ratio in words)
Example:
Term A/Term B
(Term A divided
by Term B)
Efficiency Ratio:
Receivables
Turnover
Net Sales /
Gross
Receivables
Efficiency Ratio:
Inventory
Turnover
Cost of Goods
Sold / Current
Inventory
Financial
Leverage Ratio:
Debt/Equity
Ratio
Liquidity Ratio:
Current Ratio
Current Assets /
Current
Liabilities
Liquidity Ratio:
Quick Ratio
(Cash +
Marketable
Securities +
Accounts
Receivable) /
Current
Liabilities
Liquidity:
Working Capital
Profitability
Net Income /
Ratio: Return on
Total Assets
Assets
Profitability
Net Income /
Ratio: Return on
Sales
Net Sales
Total Earned
Points
According to the Financial Information in the CanGo intranet the online gaming company cost
$30,000,000.00 They have had a Net income of $5,486,000.00 and as of 2009 the online gaming
division revenue is $25,000,000.00. There is also memo regarding pricing of the online gaming:
Competitive pricing strategy: Be competitive with other brand-name providers. Stay above low-cost
competitor (SuperPlay = $.18/minute, WildGames = $.17/minute, BudgetGames = $.13/minute).
Financial pricing strategy: Maximize revenue while still generating some profits.
Gouging considerations: Price no more than 50% above costs.
Elasticity:
As of 2009 they lost money from online gaming. However this is often expected at the beginning of a
new venture.
there are other costs to consider as well. Will there be additional staff needed for the online
gaming project to be successful? Storage space, shipping, and hardware are also other
factors to consider, as they were brought up in the week two videos. These costs are
important to consider when performing a cost benefit analysis. Utilities of running the new
systems for the online gaming section of the company should be considered as well. A loss
of money can often be expected when beginning a new venture, although it is important to
determine if the company can handle the loss or if it will tank the company by moving
forward with the venture. To properly complete a cost benefit analysis, all costs that could
occur need to be included.