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Student Name Student Number
Dudley Huckle repairs a variety of keyboard instruments from his shop in Belleville, ON. He started out on his own two years ago after buying the business of his mentor, Ludwig Mozart. The business employs 6 piano repair techs, plus Dudley. Currently, they tune and fix pianos in eastern Ontario, but Dudley believes the business can grow if he hires some new employees and opens a new office closer to Toronto. The Actual results from his first two years in operation are shown below, plus Dudley’s plan for next year, which includes an expansion of the business.
Financial
Compare your Actual results to last year’s Actual results, and
Compare this year’s actual results to Next Year’s Plan
As at: Actual results: Next year % Change: GRADE
Date This year Last year Increase or (Decrease) % Plan Next year Plan vs This Yr Actual
Balance sheet
Cash $ 28,138 $ 48,375 $ 73,217
Receivables 127,500 42,000 102,610
Inventory 53,125 43,000 40,625
Total current assets
Long-term Assets
Property, Plant, Equip 370,625 215,625 547,500
Other assets 25,000 18,750 26,250
Total assets
Current liabilities $ 130,201 $ 49,000 $ 180,049
Long term liabilities 265,625 118,750 394,687
Equity 208,562 200,000 215,466
Total liabilities and equity
Income statement
Sales Revenue $ 906,250 $ 859,375 $ 1,208,000
Cost of goods sold 171,875 153,125 237,500
Gross profit (0.5 marks) 0.5 marks 0.5
Operating Expenses:
Salaries 352,375 346,875 469,833
Rent/occupancy 89,375 84,225 115,000
Equipment Rental 18,100 34,375 9,520
Marketing and Sales 42,375 40,625 75,250
Travel 43,125 34,375 61,000
Office expenses 87,500 84,375 98,250
Other operating expenses 15,610 21,875 18,400
Depreciation 62,500 37,500 93,250
Operating Income (EBIT)
Interest/financing fees 13,342 3,750 21,875
Income Before Tax (EBT) (0.5 marks) 0.5 marks 0.5
Income Taxes (=15% of positive EBT)
Net income (0.5 marks) 0.5 marks 0.5
Cash Flow from Operations (0.5 marks) 0.5 marks 0.5
Financial ratios (3 marks) This year Last year Potential Questions Next Year Plan
Gross margin – Are your products properly priced to cover your operating costs?
Operating Margin – Does the business make an adequate return before financing costs and taxes?

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