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PJ Tessier

Cost of goods sold


Cash
Depreciation
Interest expense
Selling and administrative
Accounts Payable
Net fixed assets
Sales
Accounts reveivable
Notes payable
Long term debt
Inventory
New equity

Finance

2014
196,619 $
28,372
55,506
12,067
38,668
20,143
244,881
385,724
20,104
22,855
123,607
38,706
-

2/10/16
2015
248,263
42,865
62,738
13,831
50,469
34,091
298,350
470,172
26,078
24,955
140,000
52,057
15,000

PJ Tessier

Finance

2/10/16

Sunset Boards, Inc.


2014 Income Statement
Net Sales
Cost of goods sold
Selling and Administrative
Depreciation
Earnings before interest and tax
Interest
Earnings before tax
Taxes (30%)
Net Income
Dividends (40% of net income)
Addition to retained earnings

$
$
$
$

23,202
34,803

385,724
196,619
38,668
55,506
94,931
12,067
82,864
24,859
58,005

PJ Tessier

Finance

2/10/16

Sunset Boards, Inc.


2015 Income Statement
Net Sales
Cost of goods sold
Selling and Administrative
Depreciation
Earnings before interest and tax
Interest
Earnings before tax
Taxes (30%)
Net Income
Dividends (40% of net income)
Addition to retained earnings

$
$
$
$

26,564
39,846

470,172
248,263
50,469
62,738
108,702
13,831
94,871
28,461
66,410

PJ Tessier

Finance

2/10/16

Sunset Boards, Inc.


2014 Balance Sheet
Assets
Current Assets
Cash
Accounts Receivable
Inventory
Total
Net Fixed Assets
Total Assets

$
$
$

Liabilities and Owners' Equity


Current Liabilities
28,372
Accounts Payable
$
20,143
20,104
Notes Payable
22,855
38,706
Total
$
42,998
87,182
Long Term Debt
$ 123,607
244,881 Owners' Equity
$ 165,458
332,063 Total Liabilities and Owners' Equi $ 332,063

PJ Tessier

Finance

2/10/16

Sunset Boards, Inc.


2015 Balance Sheet
Assets
Current Assets
Cash
Accounts Receivable
Inventory
Total
Net Fixed Assets
Total Assets

$
$
$

Liabilities and Owners' Equity


Current Liabilities
42,865
Accounts Payable
$
34,091
26,078
Notes Payable
24,955
52,057
Total
$
59,046
121,000
Long Term Debt
$
140,000
298,350 Owners' Equity
$
220,304
419,350 Total Liabilities and Owners' Equ $
419,350

PJ Tessier

Finance

Sunset Boards, Inc.


2014 Operating Cash Flow
Earnings Before Interest and Tax
Depreciation (+)
Taxes (-)
Operating Cash Flow

94,931
55,506
24,859
125,578

2/10/16

PJ Tessier

Finance

Sunset Boards, Inc.


2015 Operating Cash Flow
Earnings Before Interest and Tax
Depreciation (+)
Taxes (-)
Operating Cash Flow

108,702
62,738
28,461
142,979

2/10/16

PJ Tessier

Finance

Sunset Boards, Inc.


2015 Cash Flow from Assets
Operating Cash Flow
Net Capital Spending (-)
Change in Net Working Capital (-)
Cash Flow from Assets

142,979
116,207
17,770
9,002

2/10/16

PJ Tessier

Finance

Sunset Boards, Inc.


2015 Cash Flow to Creditors
Interest Paid
Net New Borrowing (-)
Cash Flow to Creditors

$
$

13,831
16,393
(2,562)

2/10/16

PJ Tessier

Finance

Sunset Boards, Inc.


2015 Cash Flow to Stockholders
Dividends Paid
Net New Equity Raised (-)
Cash Flow to Stockholders

$
$

26,564
15,000
11,564

2/10/16

PJ Tessier

Finance

2/10/16

Question 1: How would you describe Sunset Boards cash flows for 2015?

The operating cash flow is postive which shows that Sunset Boards is making enough money to c
stockholders. Net capital spending is high in regard to the operating cash flow which is caused by
from assets is not negative which shows the company is still borrowing, but not at as high of a ra
remaining money is sufficient enough to distribute to creditors and stockholders.

Question 2: In light of your discussion of the previous question, what do you think about Tads exp

Tad's expansion plans seem sound looking at the 2015 cash flows but may need to be slowed for
positive which means the company can afford to borrow more money if they have enough eviden
potential sales are not yet estimated, it would be smart for Tad to find out whether he will be able
money borrowed from banks. The safest move Tad could make to expand, would be to first test th
opening another store. While the addition to retained earnings is almost $40,000, the immediate
company's assets forcing them to be unable to repay loans under unexpected circumstances. Tad
is to move in small steps and gradually earn money while also gaining a good reputation for a go

PJ Tessier

Finance

g enough money to cover its outflows such as cash flows to creditors and
ow which is caused by the company's cash spent on fixed assets. Cash flow
not at as high of a rate as it would be if it were growing quickly. The
ders.

u think about Tads expansion plans?

need to be slowed for a safer approach. The cash flow from assets is still
y have enough evidence to show that they will sell more boards. If the
whether he will be able to give back to his investors while still paying off
would be to first test the profitability of selling to other sellers before
0,000, the immediate costs of opening another store might deplete the
ed circumstances. Tad's idea is smart but the safest move for the company
od reputation for a good product.

2/10/16