11-15-2011, 03:54 PM
As an aspiring financial analyst, you have applied to a major Wall Street firm for a summer job. To screen potential applicants, the firm provides you a short case study and asks you to evaluate the financial success of two hypothetical companies that started operations on January, 1,2009. Both companies operate in the same industry, use very similar assets, and have very similar customer bases, Among the additional information provided about the companies are the following comparative income statements.
Fast corporation slow corporation
2010 2009 2010 2009
Net sales $60,000 $60,000 $60,000 $60,000
Cost of goods sold 20,000 20,000 20,000 20,000
Gross profit 40,000 40,000 40,000 40,000
Selling, general, and administrative expenses 19,000 19,000 19,000 19,000
Depreciation expense 3,555 10,667 5,000 5,000
Gains (losses) on disposal 2,222 ------ (2,000) ----
Income from operation $19,667 $10,333 $14,000 $16,000
Required
Prepare an analysis of the two companies with the goal of determining which company is better managed. If you could request two additional pieces of information from these companies¡¯ financial statements, describe specifically what they would be and explain how they would help you to make a decision.
Fast corporation slow corporation
2010 2009 2010 2009
Net sales $60,000 $60,000 $60,000 $60,000
Cost of goods sold 20,000 20,000 20,000 20,000
Gross profit 40,000 40,000 40,000 40,000
Selling, general, and administrative expenses 19,000 19,000 19,000 19,000
Depreciation expense 3,555 10,667 5,000 5,000
Gains (losses) on disposal 2,222 ------ (2,000) ----
Income from operation $19,667 $10,333 $14,000 $16,000
Required
Prepare an analysis of the two companies with the goal of determining which company is better managed. If you could request two additional pieces of information from these companies¡¯ financial statements, describe specifically what they would be and explain how they would help you to make a decision.
