Computron Industries
RUNNING HEADER: MINI CASE 1: COMPUTRON INDUSTRIESMini Case 1: Computron IndustriesMini Case 1: Computron IndustriesIn 2012, Computron Industries, a manufacturer of electronic calculators, has been going through some expansion and growth. Some factors of this growth have include new sales offices, doubling of plant faculties and an expensive advertising campaign. Implementation of the growth and strategic plan has been mismanaged by its administration under Robert Edwards, President and Chairman of the Board. Suppliers and lenders are being paid late, banks are complaining, and threating to cut off credit from lenders. Computron Industry’s stockholders are dissatisfied with these grievances and an overall unhealthy balance sheet. Gary Meissner, a retired banker, an former Computron Industries chairman and largest stockholder, was asked to help bring the company financial situation back into its formerly profitable company. Gary Meissner and the former chairman of the board’s assistant, Jenny Cochran, has been assigned to form a finance team to bring back the financial health of the company before the expansion of operating capacity of the Computron Industries.The intent of this document is to identify the financial impact of this expansion to Computron, and determine if expansion has provided any Market Value Added, (MVA), for Computron shareholders. A new financial strategic plan needs to fix the financial issues quickly in order to preserve Computron Industries brand name with its suppliers and to re-establish a creditable relationship with the bank and to preserve Computron Industries credit line (Brigham & Ehrhardt, 2014). Impact of the expansion on Computron Industries various accounts will need to analyze before and after the expansion.
Sales before the expansion will need to be subtracted from the sales after the expansion. Change in sales = sales after – sales before Change in sales = $5,843,400 – $5,452,000Change in sales = $2,402,400 increasedNet Income before the expansion need to be subtracted from the net income after expansion.Change in net income = net income after – net income before Change in net income = ((-$95,136) – $87,960)Change in net income = $183,096 decreased Net assets before the expansion was $1,468,800 and after expansion is $2,886,592. Change in net asset = net asset after – net asset before Change in net asset = $2,886,592 – $1, 468,800 Change in net income = $1, 417,792 Net asset = $1,417,792 increased and doubledLiabilities and equity Debt before expansion was $323,432 and after expansion $1,000,000 Change in debt = $1,000,000 – $323,432 Change in debt = $676,568 Debt = $676,568 increasedEquity Retained earnings before expansion was $203,768 and after expansion it is $97,632