FIN 534 WK 2 Discussion
frogod
2_tfc_financial_statements_112914_1.xlsxCash Budget
| TFC's Cash Budget, July - December, 2013 (Dollars in Thousands) | ||||||||||||
| TFC | The inputs in the | |||||||||||
| yellow-coded cells | ||||||||||||
| can be changed | ||||||||||||
| Payment Terms For Body Builders: | Current Terms | |||||||||||
| Percentage of Body Builders who pay in 1st month | 50% | Issuess TFC Discussed: | ||||||||||
| Percentage of Body Builders who pay in 2nd month | 45% | * Consider reducing loan payments | ||||||||||
| Percentage of Body Builders who don't pay in 1st or 2nd month. | 5% | * Dividend is important - mitigate agency problem | ||||||||||
| Bad debt Percentage (not collected) - reduces 3rd month payments received | 1% | * Changing payment plan may not help much | ||||||||||
| TFC's Cash Budget, July - December, 2013 (Dollars in Thousands) | ||||||||||||
| Projected Cash Transactions: | May | June | July | August | Sept | Oct | Nov | Dec | ||||
| Sales Forecast: | $55,000 | $55,000 | $55,000 | $55,000 | $50,000 | $50,000 | $60,000 | $60,000 | ||||
| Cash Collections on sales: | ||||||||||||
| During Current month: | 0.5 | (Sales) | $27,500.0 | $27,500.0 | $25,000.0 | $25,000.0 | $30,000.0 | $30,000.0 | ||||
| During 2nd month: | 0.45 | (prior month's sales) | $24,750.0 | $24,750.0 | $24,750.0 | $22,500.0 | $22,500.0 | $27,000.0 | ||||
| Due in 3rd month: | 0.1 | (sales 2 months ago) | $2,750.0 | $2,750.0 | $2,750.0 | $2,750.0 | $2,500.0 | $2,500.0 | ||||
| Less bad debts (BD% × Sales 2 months ago) | −$550.0 | −$550.0 | −$550.0 | −$550.0 | −$500.0 | −$500.0 | ||||||
| Total Cash Collections: | $54,450.0 | $54,450.0 | $51,950.0 | $49,700.0 | $54,500.0 | $59,000.0 | ||||||
| Cash Payments: | ||||||||||||
| Operating Expenses | $45,000.0 | $45,000.0 | $45,000.0 | $45,000.0 | $45,000.0 | $45,000.0 | ||||||
| Other payments (interest on LT bonds, dividends, etc.) | $0.0 | $0.0 | $0.0 | $0.0 | $0.0 | $25,000.0 | ||||||
| Taxes | $6,900.0 | $6,900.0 | ||||||||||
| Payment for expansion project and loans | $8,000.0 | $8,000.0 | $8,000.0 | |||||||||
| Total Cash Payments: | $45,000.0 | $45,000.0 | $51,900.0 | $53,000.0 | $53,000.0 | $84,900.0 | ||||||
| Net cash flows: | ||||||||||||
| Assuming zero cash to begin forecasted period | $0.0 | |||||||||||
| Net cash flow: Total Cash Collections – Total Cash Payments | $9,450.0 | $9,450.0 | $50.0 | −$3,300.0 | $1,500.0 | −$25,900.0 | ||||||
| Cumulative Cash Balance | $9,450.0 | $18,900.0 | $18,950.0 | $15,650.0 | $17,150.0 | −$8,750.0 | ||||||
| Cash surplus/shortage: | ||||||||||||
| Target cash balance per month | $10,000.0 | $10,000.0 | $10,000.0 | $10,000.0 | $10,000.0 | $10,000.0 | ||||||
| Cash Surplus or Shortage per month: | −$550.0 | $8,900.0 | $8,950.0 | $5,650.0 | $7,150.0 | −$18,750.0 |
Balance Sheet
| Trevose Fitness Center Balance Sheet | ||||
| (numbers are in 000's) | As of December 31, XXXX | |||
| 2011 | 2012 | 2013 (e) | ||
| Assets: | ||||
| Cash | $ 20,000 | $ 30,000 | $ 10,000 | |
| Short-Term Investments | $ 5,000 | $ 7,000 | $ 6,000 | |
| Accounts Receivables | $ 10,000 | $ 13,600 | $ 20,000 | |
| Inventories | $ 2,000 | $ 3,000 | $ 7,000 | |
| Total Current Assets: | $ 37,000 | $ 53,600 | $ 43,000 | |
| Gross Fixed Assets | $ 800,000 | $ 850,000 | $ 1,600,000 | |
| Less Accumulated Depreciation | $ 320,000 | $ 340,000 | $ 520,000 | |
| Net Fixed Assets | $ 480,000 | $ 510,000 | $ 1,080,000 | |
| Total Assets: | $ 517,000 | $ 563,600 | $ 1,123,000 | |
| (numbers are in 000's) | As of December 31, XXXX | |||
| 2011 | 2012 | 2013 (e) | ||
| Liabilities : | ||||
| Accounts Payable | $ 1,500 | $ 2,000 | $ 5,000 | |
| Notes Payable | $ 8,000 | $ 10,000 | $ 20,000 | |
| Accruals | $ 2,000 | $ 3,000 | $ 7,000 | |
| Total Current Liabilities: | $ 11,500 | $ 15,000 | $ 32,000 | |
| Long-Term Debt | $ 200,000 | $ 180,000 | $ 400,000 | |
| Total Liabilities: | $ 211,500 | $ 195,000 | $ 432,000 | |
| Equity: | ||||
| Common Stock (200,000 shares) | $ 200,000 | $ 200,000 | $ 500,000 | |
| Retained Earnings | $ 105,500 | $ 168,600 | $ 191,000 | |
| Total Equity: | $ 305,500 | $ 368,600 | $ 691,000 | |
| Total Liabilities and Equity: | $ 517,000 | $ 563,600 | $ 1,123,000 | |
Income Statement
| Trevose Fitness Center Income Statement | |||||
| (numbers are in 000's) | For Year Ended December 31, XXXX | ||||
| 2011 | 2012 | 2013 e | |||
| Net Sales | $ 350,000 | $ 393,000 | $ 660,000 | ||
| Depreciation | $ 18,000 | $ 20,000 | $ 44,000 | ||
| Other Operating Expenses | $ 200,000 | $ 230,000 | $ 538,000 | ||
| Earnings before Interest and Taxes (EBIT) | $ 132,000 | $ 143,000 | $ 78,000 | ||
| Less Interest Expense | $ 4,000 | $ 4,500 | $ 9,000 | ||
| Earnings before Taxes (EBT) | $ 128,000 | $ 138,500 | $ 69,000 | ||
| Taxes (40%) | $ 51,200 | $ 55,400 | $ 27,600 | ||
| Net Income available to common stockholders | $ 76,800 | $ 83,100 | $ 41,400 | ||
| Common Dividends | $ 20,000 | $ 20,000 | $ 50,000 | ||
| Addition to Retained Earnings | $ 56,800 | $ 63,100 | $ (8,600) | ||
| Number of Common Shares | 2,000,000 | 2,000,000 | 5,000,000 | ||
| Stock Price Per Share | $ 150.00 | $ 180.00 | |||
| Earnings Per Share | $ 38.40 | $ 41.55 | $ 8.28 | ||
Financial Ratios
| Finanicial Ratios for Trevose Fitness Center | |||||||
| Liquidity Ratios: | 2011 | 2012 | 2013 (e) | Industry Average | |||
| Current | 3.22 | 3.57 | 1.34 | 2 | |||
| Quick | 3.04 | 3.37 | 1.13 | 1.8 | |||
| Asset Management Ratios: | 2011 | 2012 | 2013 (e) | Industry Average | |||
| Total Asset Turnover | 0.68 | 0.70 | 0.59 | 0.5 | |||
| DSO | 10.43 Days | 12.63 Days | 11.06 Days | 30 Days | |||
| Debt Management Ratios: | 2011 | 2012 | 2013 (e) | Industry Average | |||
| Debt to Equity | 0.68 | 0.52 | 0.61 | 0.5 | |||
| Times Interest Earned | 33.00 | 31.78 | 8.67 | 10 | |||
| Profitabiltiy Ratios: | 2011 | 2012 | 2013 (e) | Industry Average | |||
| Net Profit Margin | 0.22 | 0.21 | 0.06 | 0.1 | |||
| Return on Equity (ROE) | 0.25 | 0.23 | 0.06 | 0.12 | |||
| Market Value Ratio: | 2011 | 2012 | 2013 (e) | Industry Average | |||
| Price/Earnings (P/E) | 3.91 | 4.33 | 3 |
TVM
| Present Value = | 5,000,000 | |||||
| Compounding Rate = | Monthly | 12 | ||||
| Annuity Payments = | 0 | |||||
| Interest Rate per Year | 8 | |||||
| Number of Years | 5 | |||||
| Future Value | $7,449,228.54 |
in 000
| Assets: | 2011 | 2012 | 2013 (e) | 0 | Libilities : | 2011 | 2012 | 2013 (e) |
| Cash | $ 20,000,000.00 | $ 30,000,000.00 | $ 10,000,000.00 | $ - 0 | Accounts Payable | $ 1,500,000.00 | $ 2,000,000.00 | $ 5,000,000.00 |
| Short-Term Investments | $ 5,000,000.00 | $ 7,000,000.00 | $ 6,000,000.00 | Notes Payable | $ 8,000,000.00 | $ 10,000,000.00 | $ 20,000,000.00 | |
| Accounts Receivables | $ 10,000,000.00 | $ 13,600,000.00 | $ 20,000,000.00 | Accurals | $ 2,000,000.00 | $ 3,000,000.00 | $ 7,000,000.00 | |
| Inventories | $ 2,000,000.00 | $ 3,000,000.00 | $ 7,000,000.00 | Total Current Liabilities: | $ 11,500,000.00 | $ 15,000,000.00 | $ 32,000,000.00 | |
| Total Current Assets: | $ 37,000,000.00 | $ 53,600,000.00 | $ 43,000,000.00 | Long-Term Debt | $ 200,000,000.00 | $ 180,000,000.00 | $ 400,000,000.00 | |
| Gross Fixed Assets | $ 800,000,000.00 | $ 850,000,000.00 | $ 1,600,000,000.00 | Total Liabilities: | $ 211,500,000.00 | $ 195,000,000.00 | $ 432,000,000.00 | |
| Less Accumulated Depreciation | $ 320,000,000.00 | $ 340,000,000.00 | $ 520,000,000.00 | Equity: | ||||
| Net Fixed Assets | $ 480,000,000.00 | $ 510,000,000.00 | $ 1,080,000,000.00 | Common Stock (200,000 shares) | $ 200,000,000.00 | $ 200,000,000.00 | $ 500,000,000.00 | |
| Total Assets: | $ 517,000,000.00 | $ 563,600,000.00 | $ 1,123,000,000.00 | Retained Earnings | $ 105,500,000.00 | $ 168,600,000.00 | $ 191,000,000.00 | |
| Total Equity: | $ 305,500,000.00 | $ 368,600,000.00 | $ 691,000,000.00 | |||||
| Total Liabilities and Equity: | $ 517,000,000.00 | $ 563,600,000.00 | $ 1,123,000,000.00 | |||||
| Income Statement (numbers are in 000's) | 2011 | 2012 | 2013 e | |||||
| Net Sales | $ 350,000,000.00 | $ 393,000,000.00 | $ 660,000,000.00 | |||||
| Depreciation | $ 18,000,000.00 | $ 20,000,000.00 | $ 44,000,000.00 | |||||
| Other Operating Expenses | $ 200,000,000.00 | $ 230,000,000.00 | $ 538,000,000.00 | |||||
| Earnings before Interest and Taxes (EBIT) | $ 132,000,000.00 | $ 143,000,000.00 | $ 78,000,000.00 | |||||
| Less Interest | $ 4,000,000.00 | $ 4,500,000.00 | $ 9,000,000.00 | |||||
| Earnings before Taxes (EBT) | $ 128,000,000.00 | $ 138,500,000.00 | $ 69,000,000.00 | |||||
| Taxes (40%) | $ 51,200,000.00 | $ 55,400,000.00 | $ 27,600,000.00 | |||||
| Net Income available to common stockholders | $ 76,800,000.00 | $ 83,100,000.00 | $ 41,400,000.00 | |||||
| Common Dividends | $ 20,000,000.00 | $ 20,000,000.00 | $ 50,000,000.00 | |||||
| Addition to Retained Earnings | $ 56,800,000.00 | $ 63,100,000.00 | $ (8,600,000.00) | |||||
| Number of Common Shares | 2,000,000 | 2,000,000 | 5,000,000 | |||||
| Stock Price Per Share | $ 150.00 | $ 180.00 | ? | |||||
| Earnings Per Share | $ 38.40 | $ 41.55 | $ 8.28 |
Sheet1
| Balance Sheet (numbers are in 000's) | As of December 31, XXXX | Balance Sheet (numbers are in 000's) | As of December 31, XXXX | |||||||
| 2011 | 2012 | 2013 (e) | 2011 | 2012 | 2013 (e) | |||||
| Assets: | Libilities : | |||||||||
| Cash | $ 20,000 | $ 30,000 | $ 10,000 | Accounts Payable | $ 1,500 | $ 2,000 | $ 5,000 | |||
| Short-Term Investments | $ 5,000 | $ 7,000 | $ 6,000 | Notes Payable | $ 8,000 | $ 10,000 | $ 20,000 | |||
| Accounts Receivables | $ 10,000 | $ 13,600 | $ 20,000 | Accurals | $ 2,000 | $ 3,000 | $ 7,000 | |||
| Inventories | $ 2,000 | $ 3,000 | $ 7,000 | Total Current Liabilities: | $ 11,500 | $ 15,000 | $ 32,000 | |||
| Total Current Assets: | $ 37,000 | $ 53,600 | $ 43,000 | Long-Term Debt | $ 200,000 | $ 180,000 | $ 400,000 | |||
| Gross Fixed Assets | $ 800,000 | $ 850,000 | $ 1,600,000 | Total Liabilities: | $ 211,500 | $ 195,000 | $ 432,000 | |||
| Less Accumulated Depreciation | $ 320,000 | $ 340,000 | $ 520,000 | |||||||
| Net Fixed Assets | $ 480,000 | $ 510,000 | $ 1,080,000 | Equity: | ||||||
| Total Assets: | $ 517,000 | $ 563,600 | $ 1,123,000 | Common Stock (200,000 shares) | $ 200,000 | $ 200,000 | $ 500,000 | |||
| Retained Earnings | $ 105,500 | $ 168,600 | $ 191,000 | |||||||
| Total Equity: | $ 305,500 | $ 368,600 | $ 691,000 | |||||||
| Total Liabilities and Equity: | $ 517,000 | $ 563,600 | $ 1,123,000 | |||||||
| For Year Ended | ||||||||||
| Income Statement (numbers are in 000's) | 2011 | 2012 | 2013 e | |||||||
| Net Sales | $ 350,000 | $ 393,000 | $ 660,000 | |||||||
| Depreciation | $ 18,000 | $ 20,000 | $ 44,000 | |||||||
| Other Operating Expenses | $ 200,000 | $ 230,000 | $ 538,000 | Liquidity: | 2011 | 2012 | 2013 (e) | Industry Average | ||
| Earnings before Interest and Taxes (EBIT) | $ 132,000 | $ 143,000 | $ 78,000 | Current | 3.2173913043 | 3.5733333333 | 1.34375 | 2 | good but in est year | |
| Less Interest | $ 4,000 | $ 4,500 | $ 9,000 | Quick | 3.0434782609 | 3.3733333333 | 1.125 | 1.8 | ||
| Earnings before Taxes (EBT) | $ 128,000 | $ 138,500 | $ 69,000 | |||||||
| Taxes (40%) | $ 51,200 | $ 55,400 | $ 27,600 | Asset Management | ||||||
| Net Income available to common stockholders | $ 76,800 | $ 83,100 | $ 41,400 | Total Asset Turnover | 0.68 | 0.70 | 0.59 | 0.5 | good | |
| DSO | 10.43 | 12.63 | 11.06 | 30 Days | good | |||||
| Common Dividends | $ 20,000 | $ 20,000 | $ 50,000 | |||||||
| Addition to Retained Earnings | $ 56,800 | $ 63,100 | $ (8,600) | Debt Management Ratios | ||||||
| Number of Common Shares | 2,000,000 | 2,000,000 | 5,000,000 | Debt to Equity | 68% | 52% | 61% | 50% | close | |
| Stock Price Per Share | $ 150.00 | $ 180.00 | ? | Times Interest Earned | 33 | 31.7777777778 | 8.6666666667 | 10 | ||
| Earnings Per Share | $ 38.40 | $ 41.55 | $ 8.28 | |||||||
| Profitabiltiy Ratios | ||||||||||
| Net Profit Margin | 22% | 21% | 6% | 10% | good but in est year | |||||
| Return on Equity (ROE) | 25% | 23% | 6% | 12% | ||||||
| Market Value Ratio | ||||||||||
| Price/Earnings Ratio | 3.91 | 4.33 | 3 |
