| HOMEWORK SET 1 TEMPLATE |
| | Balance Sheet | 2012 | 2013 | 2014e | | Free Cash Flow Calculation | | | | | Income Statements | 2012 | 2013 | 2014e |
| | Cash | $9,000 | $7,282 | $15,000 | | | 2012 | 2013 | 2014e | | Sales | $3,432,000 | $5,834,400 | $7,035,600 |
| | Short-term investments | 48,600 | 20,000 | $75,000 | | EBIT | $209,100 | $17,440 | $502,640 | | Cost of goods sold except depr. | 2,864,000 | 4,980,000 | 5,800,000 |
| | Accounts receivable | 351,200 | 632,160 | $900,000 | | Taxes | ($83,640) | ($6,976) | ($201,056) | | Depreciation and amortization | 37,800 | 233,920 | 120,000 |
| | Inventories | 715,200 | 1,287,360 | $1,800,000 | | Depreciation | 18,900 | 116,960 | 150,000 | | Other expenses | 340,000 | 720,000 | 612,960 |
| | Total current assets | $1,124,000 | $1,946,802 | $2,790,000 | | NOPAT | $125,460 | $10,464 | $301,584 | | Total operating costs | $3,241,800 | $5,933,920 | $6,532,960 |
| | Gross fixed assets | 491,000 | 1,202,950 | $1,220,000 | | | | | | | EBIT | $190,200 | ($99,520) | $502,640 |
| | Less: Accumulated depreciation | 146,200 | 263,160 | $383,160 | | | | | | | Interest expense | 62,500 | 176,000 | 80,000 |
| | Net fixed assets | $344,800 | $939,790 | $836,840 | | Operating Current Asset | $1,075,400 | $1,926,802 | $2,715,000 | | EBT | $127,700 | ($275,520) | $422,640 | 0.4 |
| | Total assets | $1,468,800 | $2,886,592 | $3,626,840 | | Operating Current Liabilities | $281,600 | $608,960 | $739,800 | | Taxes (40%) | 51,080 | -110,208 | 169,056 |
| | | | | | | Net Op Working Capital | $793,800 | $1,317,842 | $1,975,200 | | Net income | $76,620 | ($165,312) | $253,584 | $68,608 |
| | Liabilities and Equity |
| | Accounts payable | $145,600 | $324,000 | $359,800 | | | | | | | | | ($165,312) |
| | Notes payable | 200,000 | 720,000 | $300,000 | | Operating Long-term Assets | $344,800 | $939,790 | $836,840 | |
| | Accruals | 136,000 | 284,960 | $380,000 |
| | Total current liabilities | $481,600 | $1,328,960 | $1,039,800 | | Net Operating Capital | 1,138,600 | 2,257,632 | 2,812,040 |
| | Long-term debt | 323,432 | 1,000,000 | $500,000 | | Change in Net Long-term Capital | | 1,119,032 | 554,408 |
| | Common stock (100,000 shares) | 460,000 | 460,000 | $1,680,936 | | Free Cash Flow | | ($1,108,568) | ($252,824) |
| | Retained earnings | 203,768 | 97,632 | $296,216 |
| | Total equity | $663,768 | $557,632 | $1,977,152 | | Problems 3-4 |
| | Total liabilities and equity | $1,468,800 | $2,886,592 | $3,516,952 | | Ratio Analysis | 2012 | 2013 | 2014e | Industry Average |
| | | | | | | Current | 2.3 | 1.5 | 2.683 | 2.7 |
| | | | | | | Quick | 0.8 | 0.5 | 0.952 | 1 |
| | | | | | | Inventory turnover | 4.0 | 4.0 | 3.417 | 6.1 |
| | Income Statements | 2012 | 2013 | 2014e | | Days sales outstanding (DSO) | 37.4 | 39.5 | 41.063 | 32 |
| | Sales | $3,432,000 | $5,834,400 | $8,000,000 | | Fixed assets turnover | 10.0 | 6.2 | 9.560 | 7 |
| | Cost of goods sold except depr. | 2,864,000 | 4,980,000 | 6,000,000 | | Total assets turnover | 2.3 | 2.0 | 2.206 | 2.5 |
| | Depreciation and amortization | 18,900 | 116,960 | 150,000 | | Debt ratio | 35.6% | 59.6% | 22% | 32.00% |
| | Other expenses | 340,000 | 720,000 | 700,000 | | Liabilities-to-assets ratio | 54.8% | 80.7% | 42% | 50.00% |
| | Total operating costs | $3,222,900 | $5,816,960 | $6,532,960 | | TIE | 3.3 | 0.1 | 6.283 | 6.2 |
| | EBIT | $209,100 | $17,440 | $502,640 | | EBITDA coverage | 2.6 | 0.8 | 5.772 | 8 |
| | Interest expense | 62,500 | 176,000 | 80,000 | | Profit margin | 2.6% | -1.6% | 3.2% | 3.60% |
| | EBT | $146,600 | ($158,560) | $422,640 | | Basic earning power | 14.24% | 0.60% | 0.139 | 17.80% |
| | Taxes (40%) | 58,640 | -63,424 | 169,056 | | ROA | 6.0% | -3.3% | 7.0% | 9.00% |
| | Net income | $87,960 | ($95,136) | $253,584 | | ROE | 13.3% | -17.1% | 12.8% | 17.90% |
| | | | $21,824 | $403,584 | | Price/Earnings (P/E) | 9.7 | -6.3 | 11.998 | 16.2 |
| | | | | | | Price/Cash flow | 8.0 | 27.5 | 7.539 | 7.6 |
| | Other Data | 2012 | 2013 | 2014e | | Market/Book | 1.3 | 1.1 | 1.539 | 2.9 |
| | Stock price | $8.50 | $6.00 | $12.17 | | Equity Multiplier | 2.2 | 5.2 | 1.834 |
| | Shares outstanding | 100,000 | 100,000 | 250,000 | | Du Pont | 13% | -17% | 13% |
| | EPS | $0.88 | ($0.95) | $1.014 |
| | DPS | $0.22 | 0.11 | 0.22 |
| | Tax rate | 40% | 40% | 40% |
| | Book value per share | $6.64 | $5.58 | $7.909 |
| | Lease payments | $40,000 | $40,000 | $40,000 |
| 1. What is the free cash flow for 2014? |
| Free Cash Flow for 2014 = | | | ($252,824) |
| 2. Suppose Congress changed the tax laws so that Berndt's depreciation expenses doubled. |
| No changes in operations occurred. What would happen to reported profit and to net cash flow? |
| 3. Calculate the 2014 current and quick ratios based on the projected balance sheet and income statement data. |
| | 2014 Current Ratio = | | 2.7 |
| | 2014 Quick Ratio = | | 1.0 |
| What can you say about the company's liquidity position in 2014? |
| 4. Use the extended DuPont equation to provide a summary and overview of company's financial |
| condition projected for 2014. |
| | 2014 ROE = | 12.8% |
| What are the firm's major strengths and weaknesses? |
pmcclam1982
finance_hw_set_1_template.xlsx
