YEAR 0 1

INCOME STATEMENT
Revenues
Small 15,000,000.00
Medium 96,000,000.00
Large 25,000,000.00

Cost of Goods Sold

Small 10,500,000.00
Medium 64,000,000.00
Large 15,000,000.00

Total Revenues 136,000,000.00

Total Cost of Goods Sold - 89,500,000.00
Gross Profit 46,500,000.00
Operating Expenses
Marketing Expense 35,000,000.00
Selling Expense 10,000,000.00
Salaries Expense 3,000,000.00
Utilities Expense 1,500,000.00
Rent Expense 3,000,000.00
Less: Total Operating Expenses 52,500,000.00
EBITDA - 6,000,000.00
Less: Depreciation - 3,000,000.00
EBIT - 9,000,000.00
Less: Interest
PROFIT BEFORE TAXES - 9,000,000.00
Less: Taxes - 3,150,000.00
NET PROFIT - 5,850,000.00
Percentage Change in NI

NOPAT - 5,850,000.00
Percentage Change in NOPAT

BALANCE SHEET
Cash 100,000,000.00 27,190,000.00
Accounts Receivable 27,200,000.00
Inventory 22,375,000.00
Facility 50,000,000.00
Less: Accumulated Depreciation - 3,000,000.00
TOTAL ASSETS 100,000,000.00 123,765,000.00

Accounts Payable 28,640,000.00

Accrued Salaries 600,000.00
Accrued Utilities 375,000.00
Notes payable -
Bonds Payable -
Share Capital 100,000,000.00 100,000,000.00
Retained earnings - 5,850,000.00
TOTAL LIABILITIES & EQUITY 100,000,000.00 123,765,000.00

NET FIXED ASSET - 47,000,000.00

NET COMMON EQUITY 100,000,000.00 94,150,000.00
TOTAL CAPITAL 100,000,000.00 94,150,000.00

CASH FLOW STATEMENT (use incremental, not ba

Net income (loss) - 5,850,000.00
Depreciation 3,000,000.00
Total - 2,850,000.00

Accounts Receivable - 27,200,000.00

Inventory - 22,375,000.00
Accounts Payable 28,640,000.00
Accrued Salaries 600,000.00
Accrued Utilities 375,000.00
Cash flow from Operating - 22,810,000.00

Investment in Facility - 50,000,000.00

Cash flow from Investing - 50,000,000.00

Notes -
Bonds -
Cash flow from Financing -

Change in Cash Balance - 72,810,000.00

Beginning Cash Balance 100,000,000.00
Ending Cash Balance 27,190,000.00
Cash Balance in Balance Sheet 27,190,000.00
Discrepancies -

RATIOS
Liquidity ratios:
Current ratio 2.5921
Quick ratio 1.8366
Cash ratio 0.9181

Efficiency ratios:
Total Asset Turnover 1.2156
Fixed Asset Turnover 5.7872
Equity Turnover 1.4010

Profitability Ratios
Return on Assets (ROA)
Net Profit
Return on Invested Capital (ROIC)
NOPAT
Return on Equity (ROE)
Financial Leverage Multiplier
Debt to Equity Ratio 0.3146
Debt Ratio 23.9284%
Times-Interest-Earned Ratio

Earnings per share (EPS)

Price
Price-Earnings Ratio
Book Value per Share (BVPS) 470.75
Price-Book Value Per Share

Assuming that you expect your ROE levels to remain the same and you expect a Payout ratio of 60%
Growth 0.1596
Forward P/E 5.0308 - compare with Trailing
 2 3 4 5
INCOME STATEMENT

27,500,000.00 68,750,000.00 105,000,000.00 -

130,000,000.00 325,000,000.00 469,000,000.00 -
67,500,000.00 168,750,000.00 238,875,000.00 -

22,500,000.00 62,500,000.00 91,000,000.00 -

90,000,000.00 237,500,000.00 345,800,000.00 -
41,250,000.00 106,250,000.00 154,700,000.00 -

225,000,000.00 562,500,000.00 812,875,000.00 -

- 153,750,000.00 - 406,250,000.00 - 591,500,000.00 -
71,250,000.00 156,250,000.00 221,375,000.00 -

37,500,000.00 70,312,500.00 81,287,500.00

7,000,000.00 10,000,000.00 9,000,000.00
4,500,000.00 6,000,000.00 7,500,000.00
2,500,000.00 5,000,000.00 6,000,000.00
3,000,000.00 4,000,000.00 4,600,000.00
54,500,000.00 95,312,500.00 108,387,500.00 -
16,750,000.00 60,937,500.00 112,987,500.00 -
- 3,000,000.00 - 4,500,000.00 - 4,500,000.00
13,750,000.00 56,437,500.00 108,487,500.00
- 3,400,000.00 - 3,000,000.00
13,750,000.00 53,037,500.00 105,487,500.00
4,812,500.00 18,563,125.00 36,920,625.00 -
8,937,500.00 34,474,375.00 68,566,875.00 -
- 2.527778 2.857273 0.988923 - 1.000000

8,937,500.00 36,684,375.00 70,516,875.00 -

- 2.53 3.10 0.922259 - 1.00

BALANCE SHEET
915,681.82 30,895,359.85 51,523,662.59 -
53,800,000.00 114,950,000.00 97,707,500.00
28,875,000.00 106,541,666.67 75,458,333.33
50,000,000.00 65,000,000.00 65,000,000.00
- 6,000,000.00 - 10,500,000.00 - 15,000,000.00
127,590,681.82 306,887,026.52 274,689,495.92 -

17,978,181.82 136,875,151.52 35,560,745.92

900,000.00 1,200,000.00 1,500,000.00 -
625,000.00 1,250,000.00 1,500,000.00 -
5,000,000.00 - -
- 30,000,000.00 30,000,000.00
100,000,000.00 100,000,000.00 100,000,000.00
 3,087,500.00 37,561,875.00 106,128,750.00
127,590,681.82 306,887,026.52 274,689,495.92 -

44,000,000.00 54,500,000.00 50,000,000.00

103,087,500.00 137,561,875.00 206,128,750.00
103,087,500.00 167,561,875.00 236,128,750.00

W STATEMENT (use incremental, not balance)

8,937,500.00 34,474,375.00 68,566,875.00 -
3,000,000.00 4,500,000.00 4,500,000.00
11,937,500.00 38,974,375.00 73,066,875.00 -

- 26,600,000.00 - 61,150,000.00 17,242,500.00

- 6,500,000.00 - 77,666,666.67 31,083,333.33
- 10,661,818.18 118,896,969.70 - 101,314,405.59
300,000.00 300,000.00 300,000.00
250,000.00 625,000.00 250,000.00
- 31,274,318.18 19,979,678.03 20,628,302.74 -

- 15,000,000.00 -
- - 15,000,000.00 - -

5,000,000.00 - 5,000,000.00 -
- 30,000,000.00 -
5,000,000.00 25,000,000.00 - -

- 26,274,318.18 29,979,678.03 20,628,302.74 -

27,190,000.00 915,681.82 30,895,359.85 51,523,662.59
915,681.82 30,895,359.85 51,523,662.59
915,681.82 30,895,359.85 51,523,662.59 -
- 0.00 - - -

RATIOS

3.4114 1.8115 5.8269

2.2330 1.0468 3.8700
0.0374 0.2218 1.3362

1.7903 2.5893 2.7954

4.9451 11.4213 15.5574
2.2815 4.6749 4.7303

7.1114% 15.8693% 23.5797%

9.0627% 25.4753% 33.9700%
9.0627% 27.1084% 34.9361%
9.0627% 28.6511% 39.9003%
 1.2744 1.8054 1.6922
0.2377 1.2309 0.3326
19.2045% 55.1751% 24.9594%
16.5993 36.1625

44.69 172.37 342.83

2,000
5.83 TRAILING
515.44 687.81 1,030.64
1.94

a Payout ratio of 60%

 GIVEN
Capital 100,000,000.00 Product
Par Value per share 500.00
Number of Shares 200,000 DRAWBACK

Investment in Facility 50,000,000.00

Salvage Value 20,000,000.00
Useful Life 10
Depreciation 3,000,000.00 SIZES
Small
At year 2… Medium
Notes Payable 5,000,000.00 Large
1 year Note 8%

At year 3… SIZES
Expansion 15,000,000.00 Small
Useful Life 10 Medium
Depreciation 1,500,000.00 Large

Bonds Payable 30,000,000.00 Tax Rate

10 years 10%

For first year

Ending AR 20% of Revenues
Ending Inventory 25% of COGS
Ending AP 32% of COGS
Same throughout the years
Accrual of Salaries 20%
Accrual of Utilities 25%

TURNOVER
Year 2 Year 3 Year 4
A/R TURNOVER 5 6 6.88
Formula: AR turnover = credit sales/average AR

Credit Sales 90% of revenue

Average AR Average AR for the past 2 years (current year and last year)

INVTY TURNOVER 6 6 6.50

Formula: Inventory turnover = COGS/average inventory

Average Invty Average inventory for the past 2 years (current year and last year)

A/P TURNOVER 5.50 5 5.20

Formula: AP turnover = credit purchases/average AP

Credit Purchases 80% of purchases

Average AP Average AP for the past 2 years (current year and last year)

Turnover Days
Receivable Days 73.00 60.83 53.05
Inventory Days 60.83 60.83 56.15
Payable Days 66.36 73.00 70.19

Operating Cycle 133.83 121.67 109.20

Cash Conversion Cycle 67.47 48.67 39.01

1 2 3
Cost of Goods Sold 89,500,000.00 153,750,000.00 406,250,000.00
Ending Inventory 22,375,000.00 28,875,000.00 106,541,666.67
Less: Beginning Inventory - 22,375,000.00 28,875,000.00
PURCHASES 111,875,000.00 160,250,000.00 483,916,666.67
Credit Purchases 89,500,000.00 128,200,000.00 387,133,333.33

= Current Assets/Current Liabilities

= Quick Assets/Current Liabilities Quick Assets = Cash + Marketable Securities + Accounts Receiv
= Cash/Current Liabilities

= Total Revenues/Average Total Assets (for the past 2 years)

= Total Revenues/Average Net Fixed Assets
= Total Revenues/Average Net Common Equity No need for Year 1 kasi wala kang value

= Net Income/Average Total Assets

= Net Income OR NOPAT/Average Total Capital
= NOPAT/Average Total Capital
= Net Income/Average Common Equity
= Average Total Assets/Average Common Equity Standard Benchmark for FLM
= Total Liabilities/Total Equity = 2 means debt is equal to equity
= Total Debt/Total Assets > 2 means more debt than equity
= EBIT/Interest Expense < 2 means more equity than debt

= Net Income/No. of Outstanding Shares Standard Benchmark for DTER

GIVEN = 1 means debt is equal to equity
= Price per share/EPS > 1 means more debt than equity
= Net Common Equity/No. of Shares < 1 means more equity than debt
= Price/BVPS

DuPONT Equation:

Return on Equity = ROA equity multiplier

NI Average Total Assets

=
Average TA Average Common Equity

NI Sales
=
Sales Ave TA

Profitabiliy Efficiency

Net Income
Profit Margin =
Sales

D0*(1+g)
P0 =
r-g

*multiply both sides to 1/EPS0

1 D0*(1+g)
P0 =
EPS0 r-g

P0
Trailing P/E =
EPS0

P0 D0
=
EPS0 EPS0

P0 P.O.*(1+g)
=
EPS0 r-g
 1 D1
P0 =
EPS1 r-g

P0 D1
Forward P/E = =
EPS1 EPS1

P0 P.O.1
=
EPS1 r-g
Speaker (Wireless, Solar, Portable, Bluetooth, Waterproof)

Price
Create Demand

PRODUCT INFORMATION
YEAR 1 YEAR 3
Selling Price Cost/Unit Volume (Units) SIZES
5,000.00 3,500.00 3,000 Small
12,000.00 8,000.00 8,000 Medium
25,000.00 15,000.00 1,000 Large

YEAR 2 Volume
Selling Price Cost/Unit Volume (Units) Selling Price
5,500.00 4,500.00 5,000.00 Cost/Unit
13,000.00 9,000.00 10,000.00
27,000.00 16,500.00 2,500.00 YEAR 4
SIZES
35% Small
Medium
Large

Volume
Selling Price
Cost/Unit

YEAR 5
SIZES
Small
Medium
Better Large
HIGHER
Volume
Selling Price
Cost/Unit

DEPENDS

LOWER
 SHORTER
DEPENDS
LONGER

SHORTER THE BETTER

SHORT AS POSSIBLE

4
591,500,000.00
75,458,333.33
106,541,666.67
560,416,666.67
448,333,333.33

ecurities + Accounts Receivable

ear 1 kasi wala kang values for Year 0

dard Benchmark for FLM
bt is equal to equity
re debt than equity
re equity than debt

ard Benchmark for DTER

bt is equal to equity
re debt than equity
re equity than debt

equity multiplier

Average Total Assets

erage Common Equity

Ave TA
Ave CE

Risk

1
EPS0

(1+g)
r-g
 1
EPS1

1
r-g
N
YEAR 3
Selling Price Cost/Unit Volume (Units)
5,500.00 5,000.00 12,500
13,000.00 9,500.00 25,000 GROWTH RATES (Horizo
27,000.00 17,000.00 6,250 Percentage Change
Total Revenues
growth by 150% 2.50 Total Cost of Goods Sold
the same Gross Profit
increase by 500 500.00 Operating Expenses

YEAR 4
Selling Price Cost/Unit Volume (Units)
6,000.00 5,200.00 17,500
13,400.00 9,880.00 35,000
27,300.00 17,680.00 8,750 Less: Total Operating Expenses
EBITDA
growth by 40% 1.40 Less: Depreciation
EBIT
increase/decrease by 4% 1.04 Less: Interest
PROFIT BEFORE TAXES
YEAR 5 Less: Taxes
Selling Price Cost/Unit Volume (Units) NET PROFIT

NOPAT

growth by X%
Percentage Change
increase/decrease by Cash
Accounts Receivable
Inventory
Facility
Less: Accumulated Depreciation
TOTAL ASSETS

Accounts Payable
Accrued Salaries
Accrued Utilities
Notes payable
Bonds Payable
Share Capital
Retained earnings
TOTAL LIABILITIES & EQUITY
 GROWTH RATES (Horizontal Analysis)
Percentage Change 2 3 4
Total Revenues 65.4412% 150.0000% 44.5111%
Total Cost of Goods Sold 71.7877% 164.2276% 45.6000%
Gross Profit 53.2258% 119.2982% 41.6800%
Operating Expenses
Marketing Expense 7.1429% 87.5000% 15.6089%
Selling Expense -30.0000% 42.8571% -10.0000%
Salaries Expense 50.0000% 33.3333% 25.0000%
Utilities Expense 66.6667% 100.0000% 20.0000%
Rent Expense 0.0000% 33.3333% 15.0000%
Less: Total Operating Expenses 3.8095% 74.8853% 13.7180%
EBITDA -379.1667% 263.8060% 85.4154%
Less: Depreciation 0.0000% 50.0000% 0.0000%
EBIT -252.7778% 310.4545% 92.2259%
Less: Interest -11.7647%
PROFIT BEFORE TAXES -252.7778% 285.7273% 98.8923%
Less: Taxes -252.7778% 285.7273% 98.8923%
NET PROFIT -252.7778% 285.7273% 98.8923%

NOPAT -252.7778% 310.4545% 92.2259%

Percentage Change 2 3 4
Cash -96.632% 3274.028% 66.768%
Accounts Receivable 97.794% 113.662% -15.000%
Inventory 29.050% 268.975% -29.175%
Facility 0.000% 30.000% 0.000%
Less: Accumulated Depreciation 100.000% 75.000% 42.857%
TOTAL ASSETS 3.091% 140.525% -10.492%

Accounts Payable -37.227% 661.340% -74.020%

Accrued Salaries 50.000% 33.333% 25.000%
Accrued Utilities 66.667% 100.000% 20.000%
Notes payable -100.000%
Bonds Payable 0.000%
Share Capital 0.000% 0.000% 0.000%
Retained earnings -152.778% 1116.579% 182.544%
TOTAL LIABILITIES & EQUITY 3.091% 140.525% -10.492%
 Vertical Analysis
1 2 3 4
100.0000% 100.0000% 100.0000% 100.0000%
-65.8088% -68.3333% -72.2222% -72.7664%
34.1912% 31.6667% 27.7778% 27.2336%

25.7353% 16.6667% 12.5000% 10.0000%

7.3529% 3.1111% 1.7778% 1.1072%
2.2059% 2.0000% 1.0667% 0.9227%
1.1029% 1.1111% 0.8889% 0.7381%
2.2059% 1.3333% 0.7111% 0.5659%
38.6029% 24.2222% 16.9444% 13.3338%
-4.4118% 7.4444% 10.8333% 13.8997%
-2.2059% -1.3333% -0.8000% -0.5536%
-6.6176% 6.1111% 10.0333% 13.3461%
0.0000% 0.0000% -0.6044% -0.3691%
-6.6176% 6.1111% 9.4289% 12.9771%
-2.3162% 2.1389% 3.3001% 4.5420%
-4.3015% 3.9722% 6.1288% 8.4351%

1 2 3 4
21.9691% 0.7177% 10.0673% 18.7571%
21.9771% 42.1661% 37.4568% 35.5702%
18.0786% 22.6310% 34.7169% 27.4704%
40.3991% 39.1878% 21.1804% 23.6631%
-2.4239% -4.7025% -3.4215% -5.4607%
100.0000% 100.0000% 100.0000% 100.0000%

23.1406% 14.0905% 44.6012% 12.9458%

0.4848% 0.7054% 0.3910% 0.5461%
0.3030% 0.4898% 0.4073% 0.5461%
0.0000% 3.9188% 0.0000% 0.0000%
0.0000% 0.0000% 9.7756% 10.9214%
80.7983% 78.3756% 32.5853% 36.4047%
 -4.7267% 2.4198% 12.2396% 38.6359%
100.0000% 100.0000% 100.0000% 100.0000%
 PROBLEM 1
Weight Cost
DEBT 30% 5%
PREFERRED 10% 10%
COMMON 60% 15%

Tax Rate 0.40

Weighted Average of Cost of Capital

Debt 1.44%
Preferred 1.00%
Common 9.00%
WACC 11.44%

PROBLEM 2
Cost
Debt 50,000,000.00 0.45 Firm's Current Capital
Equity 60,000,000.00 0.55 Structure
TOTAL CAPITAL 110,000,000.00 1.00

Competitors Debt Equity Weight of Debt

A 25,000,000.00 50,000,000.00 0.33
B 101,000,000.00 190,000,000.00 0.35
C 40,000,000.00 60,000,000.00 0.40
166,000,000.00 300,000,000.00 1.08
Average Weight of Debt/Equity 0.36

The firm wants to recapitalize

D/E Ratio Target 0.70
Targer Debt Level 4.11765
Weight of Equity
0.67
0.65
0.60
1.92
0.64