Corporate finance
apt93
Case2-WeekendAdventures-2-StudentInstructions-SimplyVersion.docx
Case Study 2: Weekend Adventures
Student Instructions
1. Prepare pro forma income statements, cash budgets, and balance sheets for Quarter 1, 2, 3 and 4 of 2017 that attempt to address McPherson’s concerns about profitability and overuse of financial leverage while helping Zelanko meet her goal of opening a new dealership in Kelowna. A fully automated spreadsheet should be prepared.
2. Prepare a 3.0 page memorandum (12-point Calibri font, .7 inch margins) that discusses the changes in cash flows, the financial decisions made, and whether the company is meeting it financial goals and lending conditions in Quarter 1, 2, 3 and 4. A final recommendation section should discuss whether this plan will address McPherson’s concerns about profitability and overuse of financial leverage and whether Zelanko should proceed with her expansion in Kelowna.
Submit both the Excel and Word files through the course Moodle site using the drop box in Module 6.
Recommended Templates
|
Budgeted Income Statement |
|||||
|
|
Quarter 1 |
Quarter 2 |
Quarter 3 |
Quarter 4 |
Year |
|
Sales |
|
|
|
|
|
|
RV |
|
|
|
|
|
|
Freedom |
|
|
|
|
|
|
Independence |
|
|
|
|
|
|
Autonomy |
|
|
|
|
|
|
Total |
|
|
|
|
|
|
Service |
|
|
|
|
|
|
Parts |
|
|
|
|
|
|
Storage |
|
|
|
|
|
|
Total sales |
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
RV |
|
|
|
|
|
|
Freedom |
|
|
|
|
|
|
Independence |
|
|
|
|
|
|
Autonomy |
|
|
|
|
|
|
Total |
|
|
|
|
|
|
Service |
|
|
|
|
|
|
Parts |
|
|
|
|
|
|
Supplies |
|
|
|
|
|
|
Selling |
|
|
|
|
|
|
Administration and storage |
|
|
|
|
|
|
Depreciation |
|
|
|
|
|
|
Total expenses |
|
|
|
|
|
|
Operating profit |
|
|
|
|
|
|
Interest income |
|
|
|
|
|
|
Interest expense |
|
|
|
|
|
|
Income before tax |
|
|
|
|
|
|
Income tax |
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
Cash Budget |
|||||
|
|
Quarter 1 |
Quarter 2 |
Quarter 3 |
Quarter 4 |
Year |
|
Cash balance, beginning |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash receipts |
|
|
|
|
|
|
RV |
|
|
|
|
|
|
Last quarter |
|
|
|
|
|
|
This quarter |
|
|
|
|
|
|
Service |
|
|
|
|
|
|
Parts |
|
|
|
|
|
|
Storage |
|
|
|
|
|
|
Interest income |
|
|
|
|
|
|
Total cash receipts |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash disbursements |
|
|
|
|
|
|
Purchases |
|
|
|
|
|
|
Last quarter |
|
|
|
|
|
|
This quarter |
|
|
|
|
|
|
Service technicians |
|
|
|
|
|
|
Parts |
|
|
|
|
|
|
Supplies |
|
|
|
|
|
|
Selling |
|
|
|
|
|
|
Administration and storage |
|
|
|
|
|
|
Interest expense |
|
|
|
|
|
|
Income tax |
|
|
|
|
|
|
Regular dividends |
|
|
|
|
|
|
Capital purchase |
|
|
|
|
|
|
Total cash disbursements |
|
|
|
|
|
|
|
|
|
|
|
|
|
Sub-total |
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing |
|
|
|
|
|
|
Repayment |
|
|
|
|
|
|
Line-of-credit |
|
|
|
|
|
|
Term loan – Regular loan payment |
|
|
|
|
|
|
Term loan – Extra loan payment |
|
|
|
|
|
|
Borrowing |
|
|
|
|
|
|
Line-of-credit |
|
|
|
|
|
|
Term loan |
|
|
|
|
|
|
Special dividends |
|
|
|
|
|
|
Issuance and repurchase of shares |
|
|
|
|
|
|
Total financing |
|
|
|
|
|
|
|
|
|
|
|
|
|
Temporary investment |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash balance, ending |
|
|
|
|
|
|
Budgeted Balance Sheet |
||||
|
|
Quarter 1 |
Quarter 2 |
Quarter 3 |
Quarter 4 |
|
Current assets |
|
|
|
|
|
Cash |
|
|
|
|
|
Temporary investments |
|
|
|
|
|
Accounts receivable |
|
|
|
|
|
Inventory |
|
|
|
|
|
Total current assets |
|
|
|
|
|
Fixed assets, net |
|
|
|
|
|
Total assets |
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Accounts payable |
|
|
|
|
|
Line of credit |
|
|
|
|
|
Income taxes payable |
|
|
|
|
|
Current portion of long-term debt |
|
|
|
|
|
Total current liabilities |
|
|
|
|
|
Term loan |
|
|
|
|
|
Shareholders’ equity |
|
|
|
|
|
Common shares |
|
|
|
|
|
Retained earnings |
|
|
|
|
|
Total liabilities and equities |
|
|
|
|
Note: A dash means that the ratio is only calculated on an annual basis.
Evaluation Rubric
Total: _________ / 100
Letter Grade: _________
Quality of Spreadsheet: 20%
|
Physical Appearance |
/5 |
|
Input Section |
/5 |
|
Automation |
/10 |
Thoroughness of Analysis: 60%
|
Quarter 1 |
/10 |
|
Quarter 2 |
/10 |
|
Quarter 3 |
/10 |
|
Quarter 4 |
/10 |
|
Recommendations |
/20 |
Memo Layout and Writing Quality: 20%
|
Layout |
/5 |
|
Grammatical and Spelling Errors |
/5 |
|
Writing Style |
/10 |
Comments
________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
Page 5
