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& 1997 1/2 page project the need for financing for the warehouse project determined by the projected cash flows; assess the financial health of Tire City before and after the project is completed General methodology for producing a forecast average % of sales approach Sales grow at 20% compounded Cost of sales, S G & A average for past three years 96, use same for 97 Depreciation 96-213, 97-213+( 5% of 2400)
Net interest expense 96-129, 97-116 Income tax 45% Dividends 20% of PAT Cash 3% of sales A/R 15% of sales Inventories 96-given, 97-3148 Gross plant and equipment 96-given, 97-given Accumulated depreciation from income statement Current liabilities constant A/P 6% of sales Bank debt - plug figure to balance Accrued expenses 7% of sales Long term debt decline by 125 Common stock constant Retained earnings beg RE +PAT-dividends
Gross margin
Return on equity
Liquidity
Current ratio Quick ratio
Leverage
Debt to assets Debt to equity Times interest earned
Activity
Sales/assets
Days receivable
Days inventory Days payable
1.
Percy-Bowles, Inc. Pro Forma Operating Statement For the Fiscal Year Ended August 31, 1961 (Thousands of Dollars) 3,950.00 948.00 592.50 130.00 743.90 392.00 237.00 24% 15% 3% 19% 10% 6%
Net Sales Less COGS Direct Labor Materials Depreciation Overhead Gross Profit Selling Expense General & admin expense Profit before taxes Federal Income taxes Net Profit
100%
2.
a. b. c. d. e. f. g. h. i. j. k. l. m. n. o. p. q. Cash Accounts Receivable Inventories Total current assets Land, buildings, equip., trucks Accumulated depreciation Net fixed assets Other assets Total assets Accounts Payable Note payable- bank Accrued expenses & taxes Total current liabilities Mortgage payable Capital stock Earned surplus Total liabilities & net worth
2.
Cash Accounts Receivable Inventories Total current assets Land, buildings, equip., trucks Accumulated depreciation Net fixed assets Other assets Total assets Accounts Payable Note payable- bank Accrued expenses & taxes Total current liabilities Mortgage payable Capital stock Earned surplus Total liabilities & net worth Hepplefinger & Company Pro Forma Balance Sheet June 30, 1961 40,000 (minimum balance) 103,056 (14/360*2,650,000) 258,900 (221,900+2,475,000-2,438,000) 401,956 125,400 (111,400+4,000+10,000) 82,000 (73,700+8,300) 43,400 5,100 450,456 171,875 (25/360*2,475,000) 141,681 (plug figure) 11,300 (same) 324,856 22,500 (24,000-1,500) 75,000 (same) 28,100 (25,300+5,300-2,500) 450,456
3.
a. b. c. d. e. f. g. h. i. j. k. l. Sales Less: Cost of Goods Sold Direct Labor Materials Depreciation Overhead Total Cost of Goods Sold Gross Margin Sales & administrative expense Earnings before taxes Income tax Net Profit
3b.
a. b. c. d. e. f. g. h. i. j. k. l. m. n. o. p. q. Cash Accounts receivable Inventories Total current assets Machinery & equipment Accumulated depreciation Net fixed assets Other assets Total assets Accounts payable Accrued wages Accrued taxes Total current liabilities Long Term Debt Capital stock Earned surplus Total liabilities & net worth
3.
IDEAS, INC. Pro Forma Operating Statement For the Six Months Ended (Thousands of dollars) Sales Less: Cost of Goods Sold Direct Labor Materials Depreciation Overhead Total Cost of Goods Sold Gross Margin Sales & administrative expense Earnings before taxes Income tax Net Profit 600 (100*6) 120 160 12 168 460 (20*6) (40*6-80) (2 per month*6) (25/month*6+3/month) 140 108 (18*6) 32 16 (50% of profit) 16
3.
Cash Accounts receivable Inventories Total current assets Machinery & equipment Accumulated depreciation Net fixed assets Other assets Total assets Accounts payable Accrued wages Accrued taxes Total current liabilities Long Term Debt Capital stock Earned surplus Total liabilities & net worth IDEAS, INC. Pro Forma Balance Sheet At the end of six months (Thousands of dollars) 15 (given) 133 (600/180*40) 80 (20+60) 228 60 (given) 12 (2 per month*6) 48 5 (given) 281 40 ( 240/180*30) 5 (120/6/4) 16 (above) 61 104 100 (55+45) 16 (above) 281
Read Note on Financial Forecasting; Read Financial Forecasting Problems; Assign #10 - Tire City Case (due 3/10, 3/11) Extra credit cash flows from operations '96 and '97.