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The document provides information for projecting pro forma income statements and balance sheets for Tire City for 1996 and 1997. It outlines the general methodology for the financial projections, including assumptions around 20% annual sales growth, constant costs of sales and expenses as a percentage of sales, and calculations for balance sheet accounts. Key figures from Tire City's historical financial statements are also provided as inputs for the projections. Students are assigned to complete the financial projections for Tire City as outlined in the document.
The document provides information for projecting pro forma income statements and balance sheets for Tire City for 1996 and 1997. It outlines the general methodology for the financial projections, including assumptions around 20% annual sales growth, constant costs of sales and expenses as a percentage of sales, and calculations for balance sheet accounts. Key figures from Tire City's historical financial statements are also provided as inputs for the projections. Students are assigned to complete the financial projections for Tire City as outlined in the document.
The document provides information for projecting pro forma income statements and balance sheets for Tire City for 1996 and 1997. It outlines the general methodology for the financial projections, including assumptions around 20% annual sales growth, constant costs of sales and expenses as a percentage of sales, and calculations for balance sheet accounts. Key figures from Tire City's historical financial statements are also provided as inputs for the projections. Students are assigned to complete the financial projections for Tire City as outlined in the document.
Pro forma income statements and balance sheets for 1996
& 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 Ratios 95, 96, 97 Profitability Return on assets 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 Financial Statements - Forecast Systematic projection expected actions of management budgets, schedules, financial statements Working plan statistics, ratios, relationships, funds flows, conditions, decisions, activities Coordinated thinking future Reduces emergency decisions, surprises Sets standards of performance measure, control Anticipate upcoming financial needs Pro Forma statements - future Pro forma operating statement Sales Trend growth in sales % increase in number of stores Inflation rate Sales per square foot Sales per employee Assumptions estimates best guess Historical relationships Management forecasts Industry data Common sense COGS percentage of sales Other items less challenge past ratio Financial Statements - Forecast Income statement project other items Classify cost behavior assumptions vary with sales? Depreciation new assets Interest new debt Taxes rates change Percentage of sales Test assumptions constant with sales? Special cases Interest - % of total financial liabilities Adding new L/T assets cost per store? Tax rate projected EBT Classification of debt current vs. L/T Net Sales 3,950.00 100% Less COGS Direct Labor 948.00 24% Materials 592.50 15% Depreciation 130.00 3% Overhead 743.90 2,414.40 19% 61% Gross Profit 1,535.60 39% Selling Expense 392.00 10% General & admin expense 237.00 629.00 6% 16% Profit before taxes 906.60 23% Federal Income taxes 453.30 11% Net Profit 453.30 11% Percy-Bowles, Inc. Pro Forma Operating Statement For the Fiscal Year Ended August 31, 1961 (Thousands of Dollars) 1. 2. a. Cash b. Accounts Receivable c. Inventories d. Total current assets e. Land, buildings, equip., trucks f. Accumulated depreciation g. Net fixed assets h. Other assets i. Total assets j. Accounts Payable k. Note payable- bank l. Accrued expenses & taxes m. Total current liabilities n. Mortgage payable o. Capital stock p. Earned surplus q. Total liabilities & net worth 2. Hepplefinger & Company Pro Forma Balance Sheet June 30, 1961 Cash 40,000 (minimum balance) Accounts Receivable 103,056 (14/360*2,650,000) Inventories 258,900 (221,900+2,475,000-2,438,000) Total current assets 401,956 Land, buildings, equip., trucks 125,400 (111,400+4,000+10,000) Accumulated depreciation 82,000 (73,700+8,300) Net fixed assets 43,400 Other assets 5,100 Total assets 450,456 Accounts Payable 171,875 (25/360*2,475,000) Note payable- bank 141,681 (plug figure) Accrued expenses & taxes 11,300 (same) Total current liabilities 324,856 Mortgage payable 22,500 (24,000-1,500) Capital stock 75,000 (same) Earned surplus 28,100 (25,300+5,300-2,500) Total liabilities & net worth 450,456 3. a. Sales b. Less: Cost of Goods Sold c. Direct Labor d. Materials e. Depreciation f. Overhead g. Total Cost of Goods Sold h. Gross Margin i. Sales & administrative expense j. Earnings before taxes k. Income tax l. Net Profit 3b. a. Cash b. Accounts receivable c. Inventories d. Total current assets e. Machinery & equipment f. Accumulated depreciation g. Net fixed assets h. Other assets i. Total assets j. Accounts payable k. Accrued wages l. Accrued taxes m. Total current liabilities n. Long Term Debt o. Capital stock p. Earned surplus q. Total liabilities & net worth 3. IDEAS, INC. Pro Forma Operating Statement For the Six Months Ended (Thousands of dollars) Sales 600 (100*6) Less: Cost of Goods Sold Direct Labor 120 (20*6) Materials 160 (40*6-80) Depreciation 12 (2 per month*6) Overhead 168 (25/month*6+3/month) Total Cost of Goods Sold 460 Gross Margin 140 Sales & administrative expense 108 (18*6) Earnings before taxes 32 Income tax 16 (50% of profit) Net Profit 16 3. IDEAS, INC. Pro Forma Balance Sheet At the end of six months (Thousands of dollars) Cash 15 (given) Accounts receivable 133 (600/180*40) Inventories 80 (20+60) Total current assets 228 Machinery & equipment 60 (given) Accumulated depreciation 12 (2 per month*6) Net fixed assets 48 Other assets 5 (given) Total assets 281 Accounts payable 40 ( 240/180*30) Accrued wages 5 (120/6/4) Accrued taxes 16 (above) Total current liabilities 61 Long Term Debt 104 Capital stock 100 (55+45) Earned surplus 16 (above) Total liabilities & net worth 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.