FINANCIAL ANALYSIS

Financial Analysis: EZ Entertainment Corporation

Financial Analysis: EZ Entertainment Corporations

Introduction

We have analyzed EZ Entertainment Corporations through various ratios presented in this paper. EZ has been in business for 20 years as a sales and service company for entertainment equipment such as stereos, televisions and then when surround sound became popular it entered that market. Currently home entertainment systems and home theaters are a significant portion of their sales and installations. The products sold are high quality with prices ranging from $2,800 for a flat screen with installation to $50,000 for complete home theater installations including seating, automatic shades on windows and slowly dimming lights. Demographics of their clients show that these people tend to be in the upper 25% of the wealth of the community in which the stores are open. EZ has stores in New York, Boston, Fairfax Virginia, Miami, Chicago, LA and San Francisco. EZ Entertainment has two nationwide competitors, Big Easy Entertainment and Baxtons. Based on sales, EZ Entertainment is the smallest of the three companies. Assume these three companies actually exist and are operating in today's real economic conditions. Financial Statements for its competitors, Big Easy and Baxtons have been averaged to provide you with industry data. The statements are for full years 2009, 2010 and forecast for 2011 assuming the average sales for the first three quarters will be the sales for the fourth quarter (Brealey, 1991).

Co. announced that it has entered into an agreement in principle to acquire File ABC a Nevada Limited Partnership, ("File ABC") in exchange for $500,000 in cash and 200,000 shares of the Company\'s common stock. An additional 100,000 shares of the Company\'s common stock ,(up to a maximum of 1,000,000 shares), will be paid to File ABC for each $1,000,000 of revenues generated from the sale of File ABC\'s current software product and any enhancements or derivative products on or before March 31, 2000. File ABC develops publishes and markets document imaging, management and archiving software for the Windows¿ operating systems. The Company has provided File ABC with interim financing of $50,000 pending completion of the acquisition. The acquisition is subject to certain conditions and is expected to be consummated during the second quarter of fiscal 1996. If completed, the acquisition of File ABC will be accounted for using the purchase method of accounting (Altman, 2008).

Stock Valuation (See figure 1.1)

The market capitalization of EZ entertainment corporations is estimated to be around $4 million (See Figure 1.1). The total outstanding shares of the company are calculated to be 111,362 in total, having an average price of $0.04. By multiplying the total outstanding shares with the average closing price of the share of EZ Entertainment Corporation, we can find out the total market capitalization by shares to be around $ 44,544,800. The 7 day average price of the share is calculated to be $ 0.04. On the other hand the average closing price of the company's share of 30 day return is $ 0.03 and the average 200 day return of the ...