Brady Advantage 2013 Income Statement Analysis

Study Notes

Brady Advantage's 2013 Income Statement

Brady Advantage is a sporting goods store opened in Terre Haute, Indiana in 2013 by former football coach, Terry Brady.
The store is located mid-way between St. Louis and Indianapolis to attract customers from both areas.
Brady Advantage generated $210,000 in revenue from sales in 2013.
The business incurred $100,000 in total operating costs, including:
- $82,000 for cost of goods sold
- $6,000 for selling expenses
- $12,000 for administrative expenses
Brady Advantage reported $110,000 in income from operations.
The business also incurred $14,000 in interest expense from a bank loan and $8,000 in non-recurring expenses associated with starting the business.
After accounting for $16,000 in income taxes, the business recorded a net income of $72,000.

Additional Information

Terry Brady previously earned $45,000 annually in salary and benefits as a coach at Mattoon High School.
He used $50,000 of personal savings to start the store.
This personal savings had a guaranteed annual return of 12%.
Brady owns the building used for the store, which he previously rented out for $24,000 per year.

Opportunity Costs

The opportunity cost of the personal savings used to start the business is $6,000, calculated by multiplying the $50,000 investment by the 12% guaranteed return.
The total implicit cost of using owner-supplied resources is $30,000, which includes:
- $24,000 for the rental value of the building.
- $6,000 for the opportunity cost of the personal savings.

Economic Costs and Profits

The total economic cost of resources used by Brady Advantage is not provided because explicit costs are not specified.
The total economic cost is the sum of the explicit costs and the implicit costs.
The accounting profit for Brady Advantage in 2013 is $72,000.
Economic profit is calculated by subtracting total economic cost from total revenue.
Economic profit is not provided because total economic costs are not available.

Description

Explore the financials of Brady Advantage, a sporting goods store established in Terre Haute, Indiana, in 2013. This quiz covers revenue, operating costs, net income, and other financial metrics. Test your understanding of income statements and financial performance in a startup context.