Lef Centre Right

Highly competitive Workout Net impact: Significant

Short PCL P&L Would raise capital?
Low entry barriers B&S Risky collateral
Extreme seasonality
Low margins Cash flow LP only for top products
High impact change:
Needs large funding
Feasible to raise funding?
COGS level 65.10%
Tax rate 34%
LT debt interest 9.63%
Notes payable intrest 9%

bop prodn. sales eop

Jan 586 542.5 78 1,050.4
Feb 1,050 542.5 91 1,501.7
Mar 1,502 542.5 104 1,940.1
Apr 1,940 542.5 91 2,391.4
May 2,391 542.5 91 2,842.8
Jun 2,843 542.5 91 3,294.2
Jul 3,294 542.5 104 3,732.5
Aug 3,733 542.5 1,055 3,220.4
Sep 3,220 542.5 1,198 2,565.0
Oct 2,565 542.5 1,393 1,714.4
Nov 1,714 542.5 1,488 769.4
Dec 769 542.5 726 586.0
Income statement Jan Balance Sheet Dec. Jan Cash flow statement Jan
Net sales 120 Cash 200 623.86 Inflows:
COGS 78.12 A/R 2905 1060 Collection of A/R 1965
Gross profit 41.88 Inventory 586 1050 Interest received 1.37
Opex 209.58 Current assets 3691 2,734 Total cash inflows 1966.373
Interest expense: Net PPE 1176 1,176 Outflows:
LT debt 3.61 Total assets 4867 3,910 AP paid 282
Notes payable 2.82 A/P 282 250 Other mfg. exp. 292.5
Interest income 1.37 Notes payable 752 0 Opex 209.58
PBT -172.76 Accured taxes 88 29.26 Interest paid
PAT -114.02 LT debt, current 50 50 LT debt 3.61
Total CL 1172 329.3 Notes payable 2.82
LT debt 400 400 Taxes paid 0
Net worth 3295 3,181 LT loan repaid 0
Total liabilites 4,867 3,910 Total outflows 790.51
Net inflows 1,175.86
Open cash balance 200
Total cash available 1,375.86
Notes payable - open 752
Notes payable drawn (repaid) -752
Notes payable closing 0
Cash balance closing 623.86
Table A: Condensed Income Statements, 1991-93 ($ '000)

1991 1992 1993

Net sales 5,213 6,167 7,967
Cost of goods sold 3,597 4,440 5,577
Gross profit 1,616 1,727 2,390
Operating expenses 1,199 1,542 1,912
Interest expenses 68 75 85
Interest income 20 15 16
PBT 369 125 409
Income tax 125 43 139
Net profit 244 82 270

Table B: Balance Sheet as on December 31, 1993 ($ 000)

Cash 200
Accounts receivable 2,905
Inventory 586
Current assets 3,691
Plant and equipment, net 1,176
Total assets 4,867

Accounts payable 282

Notes payable, Bank 752
Accrued taxes 88
LT debt, current portion 50
Current liabilities 1,172
Long-term debt 400
Shareholders' equity 3,295
Total liabilities and shareholders' equity 4,867

Table C: Monthly sales data ($ 000)

Sales 1993 Projected 1994
January 64 120
February 88 140
March 96 160
April 88 140
May 87 140
June 95 140
July 96 160
August 1251 1620
September 1474 1840
October 1723 2140
November 1965 2285
December 940 1115

Pro Forma Balance Sheets under Seasonal Production, 1994 ($ 000)

Actual Dec. 3 Feb Mar Apr May Jun Jul Aug Sep Oct Nov
Cash 200 878 1526 1253 1054 915 696 527 200 200 200 200
Accounts receivable 2905 1060 260 300 300 280 280 300 1780 3460 3980 4425
Inventory 586 586 586 586 586 586 586 586 586 586 586 586
Current assets 3691 2524 2372 2139 1940 1781 1562 1413 2566 4246 4766 5211
Net plant and equipment 1176 1176 1176 1176 1176 1176 1176 1176 1176 1176 1176 1176
Total assets 4867 3700 3548 3315 3116 2957 2738 2589 3742 5422 5942 6387

Accounts payable 282 36 42 48 42 42 42 48 486 552 642 686

Notes, payable, bank 752 0 0 0 0 0 0 0 433 1741 1745 1677
Accrued taxes 88 31 -23 -162 -251 -305 -394 -448 -352 -271 -126 33
Long-term debt, current portion 50 50 50 50 50 50 50 50 50 50 50 50
Current liabilities 1172 117 69 -64 -159 -213 -302 -350 617 2072 2311 2446
Long-term debt 400 400 400 400 400 400 375 375 375 375 375 375
Shareholders' equity 3295 3183 3079 2979 2875 2770 2665 2564 2750 2975 3256 3566
Total liabilities and equity 4867 3700 3548 3315 3116 2957 2738 2589 3742 5422 5942 6387

Proforma Income Statement Under Seasonal Production, 1994 ($ 000)

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Net sales 120 140 160 140 140 140 160 1620 1840 2140 2285 1115
Cost of goods sold 84 98 112 98 98 98 112 1134 1288 1498 1600 781
Gross profit 36 42 48 42 42 42 48 486 552 642 685.5 334.5
Operating expenses 200 200 200 200 200 200 200 200 200 200 200 200
Interest expense 7.0 4.0 4.0 4.0 4.0 4.0 3.0 5.0 12.0 17.0 17.0 14.0
Interest income 2.0 4.0 5.0 4.0 3.0 3.0 2.0 1.0 1.0 1.0 1.0 1.0
Profit (loss) before taxes -169 -158 -151 -158 -159 -159 -153 282 341 426 469.5 121.5
Income taxes -57 -54 -51 -54 -54 -54 -52 96 116 145 159 42
Net profit -112 -104 -100 -104 -105 -105 -101 186 225 281 310.5 79.5
Dec
200
3400
586
4186
1176
5362

334
942
40
50
1366
350
3646
5362

Total
10000
7000
3000
2400
95.0
28.0
533
182
351
Income statement
Dec. 1Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Net sales 120 140 160 140 140 140 160 1,620 1,840 2,140 2,285 1,115 10000
COGS 78 91 104 91 91 91 104 1,055 1,198 1,393 1,488 726 6510
Opex 210 210 210 210 210 210 210 210 210 210 210 210 2515
Interest exp.
LT debt 3.6 3.6 3.6 3.6 3.6 3.6 3.4 3.4 3.4 3.4 3.4 3.4 42.1
Notes payable 2.82 0.00 0.38 3.19 7.88 12.77 17.78 22.51 27.34 26.64 19.47 10.60 151.4
Interest income 1.38 2.41 1.70 0.67 0.67 0.67 0.67 0.67 0.67 0.67 0.67 0.67 11
PBT -173 -162 -156 -167 -172 -176 -174 331 402 508 566 166 793
Taxes -59 -55 -53 -57 -58 -60 -59 112 137 173 192 57 270
PAT -114 -107 -103 -110 -113 -116 -115 218 266 335 373 110 523.4

Balance sheet
Dec. Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average

Cash flow statement

Dec. 9Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Inflows
A/R collection 1965 940 120 140 160 140 140 140 160 1620 1840 2140 9505
Interest received 1.38 2.41 1.70 0.67 0.67 0.67 0.67 0.67 0.67 0.67 0.67 0.67 11.48
Total inflows 1,966.4 942.4 121.7 140.7 160.7 140.7 140.7 140.7 160.7 1,620.7 1,840.7 2,140.7 9,516.5
Outflows 0
A/P paid 282 250 250 250 250 250 250 250 250 250 250 250 3032
Other mfg. 292.5 292.5 292.5 292.5 292.5 292.5 292.5 292.5 292.5 292.5 292.5 292.5 3510
Opex 209.6 209.6 209.6 209.6 209.6 209.6 209.6 209.6 209.6 209.6 209.6 209.6 2,515.0
Interest payments: 0
LT debt 21.7 20.5 42.11
Notes payable 2.8 0.0 0.4 3.2 7.9 12.8 17.8 22.5 27.3 26.6 19.5 10.6 151.4
Taxes paid 88 35 35 35 35 228
Loan repaid 25 25 50
Total cash outflows 786.9 752.1 840.5 790.3 760.0 846.5 769.9 774.6 814.4 778.7 771.6 843.1 9,528.5
Net cash inflows 1179.5 190.3 -718.8 -649.6 -599.3 -705.8 -629.2 -633.9 -653.8 841.9 1069.1 1297.5 -12.0
Op. cash balance 200 627 818 200 200 200 200 200 200 200 200 200 287.1
Total cash available 1379 818 99 -450 -399 -506 -429 -434 -454 1042 1269 1498 286.1
Op. notes payable 752 0 0 101 751 1350 2056 2685 3319 3973 3131 2062 1,681.5
 Notes drawn (repaid) -752 0 101 650 599 706 629 634 654 -842 -1069 -1298 1.0
Closing bal. notes 0.0 0.0 101.0 750.6 1349.9 2055.7 2684.9 3318.8 3972.6 3130.6 2061.5 764.0 1,682.5
Closing balace cash 627 818 200 200 200 200 200 200 200 200 200 200 287.1

Inventory Dec. 9Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Opening balance 586 1,050.4 1,501.7 1,940.1 2,391.4 2,842.8 3,294.2 3,732.5 3,220.4 2,565.0 1,714.4 769.4 2,134.0
Prodn. 542.5 542.5 542.5 542.5 542.5 542.5 542.5 542.5 542.5 542.5 542.5 542.5 6510
Sales 78.1 91.1 104.2 91.1 91.1 91.1 104.2 1,054.6 1,197.8 1,393.1 1,487.5 725.9 6,510.0
eop. balance 1,050.4 1,501.7 1,940.1 2,391.4 2,842.8 3,294.2 3,732.5 3,220.4 2,565.0 1,714.4 769.4 586.0 2,134.0

OT premium saved 225

Inventory levels
Other direct labour 265
4,000.0 Storage cost -115
3,500.0 Interest cost -98.49
Interest income -16.52
3,000.0
Incremental PBT 260.00
2,500.0 PAT 171.60
2,000.0

1,500.0

1,000.0

500.0

0.0
Ja n Feb Ma r Apr May Jun Jul Aug Sep Oct Nov Dec
Operating cycle

Sales 360 million a year

Gross profit margin 15%

No. of days (calendar days) 360

Item % of sales Days Total
Raw material 25% 40 10.0
WIP (50% of processing) 55% 20 11.0
FG 85% 40 34.0
Receivables 100% 60 60.0
Payables 25% 30 7.5
Net working capital 107.5

Operating cycle 107.5

55
Amazon Inc. (figures in million $)
2015 2014 2013 2012
Total Receivables, Net 5,654 5,612 4,767 3,817
Total Inventory 10,243 8,299 7,411 6,031
Accounts Payable 20,397 16,459 15,133 13,318
NWC -4,500 -2,548 -2,955 -3,470

Revenue 107,006 88,988 74,452 61,093

Cost of Revenue 71,651 62,752 54,181 45,971

Days receivables 19.3 23.0 23.4 22.8

Days payables outstanding 103.9 95.7 101.9 105.7
Days inventory 52.2 48.3 49.9 47.9
Net cash conversion cycle -32.4 -24.4 -28.7 -35.1
Amazon Inc. (figures in million $)
2015 2014 2013 2012
Total Receivables, Net 13,164 8,339 5,654 5,612
Total Inventory 16,047 11,461 10,243 8,299
Accounts Payable 34,616 25,309 20,397 16,459
NWC -5,405 -5,509 -4,500 -2,548

Revenue 177,866 135,987 107,006 88,988

Cost of Revenue 111,934 88,265 71,651 62,752

Days receivables 27.0 22.4 19.3 23.0

Days payables outstanding 112.9 104.7 103.9 95.7
Days inventory 52.3 47.4 52.2 48.3
Net cash conversion cycle -33.5 -34.9 -32.4 -24.4

Walmart Inc. (figures in million $)

Total Receivables, Net 5,614 5,835 5,624 6,778
Total Inventory 43,783 43,046 44,469 45,141
Accounts Payable 46,092 41,433 38,487 38,410
Net working capital 3,305 7,448 11,606 13,509

Total Revenue 500,343 485,873 482,130 485,651

Cost of Revenue 373,396 361,256 360,984 365,086

Days receivables 4.1 4.4 4.3 5.1

Days payables outstanding 45.1 41.9 38.9 38.4
Days inventory 42.8 43.5 45.0 45.1
Net cash conversion cycle 1.8 6.0 10.3 11.8
Amazon
Jan-2018 Jan-2017 Jan-2016
Current Assets
Cash And Cash Equivalents 20,522 19,334 15,890
Short Term Investments 10,464 6,647 3,918
Net Receivables 13,164 8,339 5,654
Inventory 16,047 11,461 10,243
Other Current Assets - - -
Total Current Assets 60,197 45,781 35,705
Current Liabilities
Accounts Payable 34,616 25,309 20,397
Short/Current Long Term Debt 100 1,056 238
Other Current Liabilities 8,097 7,168 5,118
Total Current Liabilities 42,813 33,533 25,753
non-cash NWC -13,502 -12,677 -9,618

Walmart
Current Assets
Cash And Cash Equivalents 6,756 6,867 8,705
Short Term Investments
Net Receivables 5,614 5,835 5,624
Inventory 43,783 43,046 44,469
Other Current Assets - - -
Total Current Assets 56,153 55,748 58,798

Current Liabilities
Accounts Payable 46,092 41,433 38,487
Short/Current Long Term Debt 3,738 2,256 2,745
Other Current Liabilities 2,662 2,777 521
Total Current Liabilities 52,492 46,466 41,753
non-cash NWC 643 4,671 11,085

Source: Yahoo Finance

 Jan-2015

14,557
2,859
5,612
8,299
-
31,327

16,459
1,520
3,523
21,502
-6,071

9,135

6,778
45,141
-
61,054

38,410
4,792
1,021
44,223
12,488
Sales 60 1 60
RM 15 0.333333 5
WIP 15 0.583333 8.75
FG 30 0.833333 25
A/P 30 0.333333 10
Net operaing cycle 88.75