Integrative Case 2 Track Software, Inc. even years ago, after 15 years in public

Question

Integrative Case 2 Track Software, Inc. even years ago, after 15 years in public accounting, Stanley Booker, CPA resigned his position as manager of cost systems for Davis, Cohen, an Public Accountants and started Track Software, Inc. In the 2 years preceding his departure from Davis, Cohen, and O'Brien, Stanley had spent nights and weekends eveloping a sophisticated cost-accounting software program that became Track's initial product offering. As the firm grew, Stanley planned to develop and expaned the software product offerings, all of which would be related to streamlining the d O'Brien accounting processes of medium- to large-sized manufacturers. Although Track experienced losses during its first 2 years of operation-2009 and 2010-its profit has increased steadily from 2011 to the present (2015). The firm's profit history, including dividend payments and contributions to retained earnings, is summarized in Table 1 Stanley started the firm with a $100,000 investment: his savings of $50,000 as equity and a $50,000 long-term loan from the bank. He had hoped to maintain his initial 10 0 percent ownership in the corporation, but after experiencing a $50,000 the stock to a loss during the first year of operation (2009), he sold 60 percent of group of investors to obtain needed funds. Since then, no other stock transactions have taken place. Although he owns only 40 percent of the firm, Stanley actively manages all aspects of its activities; the other stockholders are not active in manage- ment of the firm. The firm's stock was valued at $4.50 per share in 2014 and at S5.28 per share in 2015. TABLE 1 Track Software, Inc., Profit, Dividends, and Retained Earnings, 2009-2015 Dividends paid Net profits after taxes Contribution to retained earnings 1(1) - (2)I ear 2009 201 2011 201 ($50,000) (20,000) 15,000 35,000 40,000 ($50,000) (20,000) 15,000 35,000 39,000 40,000 43,000

Explanation / Answer

Year Net profit after taxes Dividends paid Contribution to retained earning EPS=PAT/no.of share Stanley share 2009 -50000 0 -50000 -10 -50000 2010 -20000 0 -20000 -4 -8000 2011 15000 0 15000 3 6000 2012 35000 0 35000 7 14000 2013 40000 1000 39000 8 16000 2014 43000 3000 40000 8.6 17200 2015 48000 5000 43000 9.6 19200 No. of share at the start=50000/10 = 5000share No. of share owned by stanley (2010-2015)= 5000*40% = 2000 Shares EPS performance= EPS is incresaing day by day. As, we can see that from loss 10rs per share to profit of 9.6rs per share in 7 year is a great progress

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