Question

Please respond to the following questions regarding the Gemini Electronics.

1) Prepare cash flow statements for each year 2008 and 2009. (Note: the equity account would change each year by net income earned for the year less dividends paid plus proceeds from shares issued. You may assume the firm did not issue new shares either year. Net income for the year is captured at the beginning of the cash flow statement. Dividends paid should be included in the statement as a financing activity.)

2) Calculate the asset management, profitability, debt management, and liquidity ratios we reviewed in class for each of the past three years.

3) Prepare common-size income statements and balance sheets for each of the past three years.

4) Based on the analyses completed above, evaluate Gemini’s financial health How well has the company been performing? What concerns, if any, do you have about the firm? What recommendations would you make?

GEMINI ELECTRONICS LTD.
INCOME STATEMENT
	2007	2008	2009
Sales	8,671,715,000	12,175,476,500	13,664,714,160
Cost of Goods Sold	5,032,513,200	7,886,796,000	8,974,149,576
Gross Profit	3,639,201,800	4,288,680,500	4,690,564,584
Operating Costs
Selling and Distribution	854,300,000	934,532,230	1,001,234,530
R&D	365,660,340	476,350,230	785,774,340
Administration	832,740,300	999,453,230	980,340,500
Amortization	187,929,165	288,216,088	394,440,051
Operating Profit	1,398,571,995	1,590,128,722	1,528,775,163
Interest	288,898,584	277,686,944	329,923,700
Earnings Before Taxes	1,109,673,411	1,312,441,778	1,198,851,462
Taxes	388,385,694	459,354,622	419,598,012
Net Income	721,287,717	853,087,156	779,253,450

GEMINI ELECTRONICS LTD.
BALANCE SHEET
Cash	1,437,227,573	1,366,526,361	1,413,474,400
A/R	1,201,094,250	1,328,523,975	1,503,560,340
Parts Inventory	960,875,400	1,062,819,180	1,201,345,530
WIP Inventory	66,650,675	75,640,210	89,575,400
Finished Goods Inventory	1,451,230,215	1,605,660,505	1,805,340,520
Total Current Assets	5,117,078,113	5,439,170,231	6,013,296,190
L,P,& E, Net	1,317,388,220	2,281,077,095	3,363,891,508
Intangibles	561,903,428	601,083,781	580,509,006
Total Assets	6,996,369,761	8,321,331,107	9,957,696,704
A/P	1,305,530,320	1,509,430,300	1,564,430,450
Current Portion of LT Debt	607,184,919	651,847,287	785,532,620
Total Current Liabilities	1,912,715,239	2,161,277,587	2,349,963,070
Long-term Debt	3,035,924,595	3,259,236,437	3,927,663,101
Shareholders’ Equity	2,047,729,927	2,900,817,082	3,680,070,533
Total Liabilities and Equities	6,996,369,761	8,321,331,107	9,957,696,704

Answer 1

Answer-1:

| 2009 $ 779,253,450 Gemini Electronics Ltd. Statement of Cash Flows 2008 Cash Flow from Operating Activities: Net Income $ 853,087,156 Adjustment to Reconcile Net Income to Net Cash | Provided by (used for) Operating Activities: Amortization expense $ 288,216,088 Increase in account receivable (127,429,725) Increase in inventory, WIP and FG (265,363,605) Increase in account payable 203,899,980 Increase in current portion of LT Debt 44,662,368 $ 394,440,051 (175,036,365) (352,141,555) 55,000,150 133,685,333 $ 997,072,262 $ 835,201,064 Net cash provided by operating activities Investing activities: Additions to Intangibles Additions to L,P, & E, Net (327,396,441) (963,688,875) (373,865,276) (1,082,814,413) $ (1,291,085,316) $ (1,456,679,689) Net cash used in investing activities Financing activities: Issuance of equity Debt raised 223,311,842 668,426,664 | Net cash used in financing activities Net increase in cash and cash equivalents Beginning cash and cash equivalents Ending cash and cash equivalents $ 223,311,842 $ (70,701,212) $ 1,437,227,573 $ 1,366,526,361 $ 668,426,664 $ 46,948,039 $ 1,366,526,361 $ 1,413,474,400