Summary: Tire City Case
Tire City Case
1993 1994 1995 Notes-96 Multipli er 1996 Notes-97 Multipli er 1997
INCOME STATEMENT
Net Sales Cost of Sales Gross Profit 16230 9430 6800 20355 11898 8457 staff projected 20% 23505 incr 58.1% 93, 58.5% 94, 13612 57.9% 95 9893 maintain same relationship to sales; 32% 93, 31.2% 94, 7471 31.8% 95 but "no depreciation on new expansion in 96 and expense on other assets should 213 remain the same % of S/T (Maturities of L/T) & L/T debt; 10.5% 93, 10.6% 94, 10.4% 94 95 2115 Rate (% of pre-tax income): 41% 93, 48.5% 94, 43.7% 95 925 (Avergage = 44.4%) 1190 1.2 0.58 28206 16359 11847 1.2 0.58 33847 19631 14216
SG& A Exp
5195
6352
0.32
9026
0.32
10831
Depreciation Exp
160
180
5% depr. Of the warehouse …show more content…
total cost 213 (120K)
120
333
Net Interest Expense Pre-Tax Income
119 1326
106 1819
0.105
66 2542
0.105
53 2999
Income Taxes Net Income
546 780
882 937
0.444
1129 1413
0.444
1332 1668
Dividends
155
200
dividend payout policy to remain unchanged (19.9% 93, 20% 94, 20.2% 95) as % of net 240 income
0.2
283
0.2
334
BALANCE SHEET
ASSETS Cash 508 609 706 3% of sales "maintain directrelationship to sales"; 15.7% 93, 3652 15.2% 94, 15.5% 95 0.03 846 3% of sales 0.03 1015
Accounts Receivable
2545
3095
0.155
4372 should rise to same proportion of inventory to sales as 1995, which was 1625 9.32% (2190/23505) 6843
0.155
5246
Inventories Total Current Assets
1630 4683
1838 5542
temporary decrease in 2190 inventory 6548
0.0932
3155 9416
Gross Plant & Equipment
3232
3795
Accumulated Depreciation
1335
1515
$2M (of $2.4M) expansion - no other 4163 capital expenditures 41% 93, 40% 94, 41.5% 95, but "no depreciation on new expansion in 96 and expense on other assets should remain 1728 the same
2000
$400K (of $2.4 M) 6163 expansion
400
6563
=1728 + 213
5% depr.
Of the warehouse total cost 1941 (120K)+ 213
=1941+ 333
2274
Net Plant & Equipment Total Assets
1897 6580
2280 7822
2435 8983
4222 11065
4289 13705
LIABILITIES
Using the established line of credit, that had not yet been used, 0 this as of '95, 7 years remain of annual installments to 125 MidBank for '91 loan A/P in relationship to sales: 6.4% in 93, 6.5% in 94, 6.1% in 95 (Avg 1440 6.33%) 0.0633 Accr Exp as % sales (7.06% in 93, 7.04% in 1653 94, 7.03% in 95) 0.0704 3218 Using the established line of credit, that had 398 not yet been used
Additional New Funding
0
0
1075
Current Maturities L/T Debt
125
125
125
125
Accounts Payable …show more content…
1042
1325
1785
0.0633
2143
Accrued Expenses Total Current Liabilities
1145 2312
1432 2882
1986 4294
0.0704
2383 5725
L/T Debt
1000
875
1st installment of the bank loan is not due until 1yr after the completion which is 1998 (do not include =(750125) 750 the $2M)
625
L/T Debt 96 - 125
500
Common Stock Retained Earnings Total Sharholders Equity Total Liabilities
1135 2133 3268 6580
1135 2930 4065 7822
asume will remain the same, since took loan for new cap 1135 expenditures Net Income minus 3880 dividends = 5015 8983
1135 1131 Net Income 5011 Divendends= 6146 11065 1334
1135 6345 7480 13705
FORGOT TO ADD NEW DEBT INTEREST EXPENSE LINE TO INCOME STATEMENT - should add new line item "New Debt Expense" at 10% which is what I paid on the other loans
USE SOLVER TO BALANCE - see prof excel
could use turnover average ratio A/R to Avg Sales - look at Prof excel for example inventory as % of sales is not usually the case; should typicall use inventory turnover ratio (inv/COGS)
FORGOT TO ADD NEW DEBT INTEREST EXPENSE LINE TO INCOME STATEMENT
Also need to add a new maturities lone for the loan balance that we expect to pay in 98 A/P as % of sales is not usually the case it should be related to inventory purchases; should typicall use COGS ( 1st inventory turnover ratio then A/P
turnover)
would expect this # not to be smooth since they are depleting inventory in 96 and building back u in 97
implication is that 10% is borrowing rate -see Prof excel
1993 1994 1995 Notes-96 Multipli er 1996 Notes-97 Multipli er 1997
INCOME STATEMENT
Net Sales Cost of Sales Gross Profit 16230 9430 6800 20355 11898 8457 staff projected 20% 23505 incr 58.1% 93, 58.5% 94, 13612 57.9% 95 9893 maintain same relationship to sales; 32% 93, 31.2% 94, 7471 31.8% 95 but "no depreciation on new expansion in 96 and expense on other assets should 213 remain the same % of S/T (Maturities of L/T) & L/T debt; 10.5% 93, 10.6% 94, 10.4% 94 95 2115 Rate (% of pre-tax income): 41% 93, 48.5% 94, 43.7% 95 925 (Avergage = 44.4%) 1190 1.2 0.58 28206 16359 11847 1.2 0.58 33847 19631 14216
SG& A Exp
5195
6352
0.32
9026
0.32
10831
Depreciation Exp
160
180
5% depr. Of the warehouse …show more content…
total cost 213 (120K)
120
333
Net Interest Expense Pre-Tax Income
119 1326
106 1819
0.105
66 2542
0.105
53 2999
Income Taxes Net Income
546 780
882 937
0.444
1129 1413
0.444
1332 1668
Dividends
155
200
dividend payout policy to remain unchanged (19.9% 93, 20% 94, 20.2% 95) as % of net 240 income
0.2
283
0.2
334
BALANCE SHEET
ASSETS Cash 508 609 706 3% of sales "maintain directrelationship to sales"; 15.7% 93, 3652 15.2% 94, 15.5% 95 0.03 846 3% of sales 0.03 1015
Accounts Receivable
2545
3095
0.155
4372 should rise to same proportion of inventory to sales as 1995, which was 1625 9.32% (2190/23505) 6843
0.155
5246
Inventories Total Current Assets
1630 4683
1838 5542
temporary decrease in 2190 inventory 6548
0.0932
3155 9416
Gross Plant & Equipment
3232
3795
Accumulated Depreciation
1335
1515
$2M (of $2.4M) expansion - no other 4163 capital expenditures 41% 93, 40% 94, 41.5% 95, but "no depreciation on new expansion in 96 and expense on other assets should remain 1728 the same
2000
$400K (of $2.4 M) 6163 expansion
400
6563
=1728 + 213
5% depr.
Of the warehouse total cost 1941 (120K)+ 213
=1941+ 333
2274
Net Plant & Equipment Total Assets
1897 6580
2280 7822
2435 8983
4222 11065
4289 13705
LIABILITIES
Using the established line of credit, that had not yet been used, 0 this as of '95, 7 years remain of annual installments to 125 MidBank for '91 loan A/P in relationship to sales: 6.4% in 93, 6.5% in 94, 6.1% in 95 (Avg 1440 6.33%) 0.0633 Accr Exp as % sales (7.06% in 93, 7.04% in 1653 94, 7.03% in 95) 0.0704 3218 Using the established line of credit, that had 398 not yet been used
Additional New Funding
0
0
1075
Current Maturities L/T Debt
125
125
125
125
Accounts Payable …show more content…
1042
1325
1785
0.0633
2143
Accrued Expenses Total Current Liabilities
1145 2312
1432 2882
1986 4294
0.0704
2383 5725
L/T Debt
1000
875
1st installment of the bank loan is not due until 1yr after the completion which is 1998 (do not include =(750125) 750 the $2M)
625
L/T Debt 96 - 125
500
Common Stock Retained Earnings Total Sharholders Equity Total Liabilities
1135 2133 3268 6580
1135 2930 4065 7822
asume will remain the same, since took loan for new cap 1135 expenditures Net Income minus 3880 dividends = 5015 8983
1135 1131 Net Income 5011 Divendends= 6146 11065 1334
1135 6345 7480 13705
FORGOT TO ADD NEW DEBT INTEREST EXPENSE LINE TO INCOME STATEMENT - should add new line item "New Debt Expense" at 10% which is what I paid on the other loans
USE SOLVER TO BALANCE - see prof excel
could use turnover average ratio A/R to Avg Sales - look at Prof excel for example inventory as % of sales is not usually the case; should typicall use inventory turnover ratio (inv/COGS)
FORGOT TO ADD NEW DEBT INTEREST EXPENSE LINE TO INCOME STATEMENT
Also need to add a new maturities lone for the loan balance that we expect to pay in 98 A/P as % of sales is not usually the case it should be related to inventory purchases; should typicall use COGS ( 1st inventory turnover ratio then A/P
turnover)
would expect this # not to be smooth since they are depleting inventory in 96 and building back u in 97
implication is that 10% is borrowing rate -see Prof excel