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ENGINEERING FIRM

#1 REAL REVENUE GROWTH


NOMINAL REVENUE GROWTH

#2 SUSTAINABLE REVENUE GROWTH


PRICE ADJ REV

PRICE ADJUSTED REVENUE GROWTH

25.00%

SUSTAINABLE REV

#3 PRICING POLICY

NOMINAL REV

GP MARK-UP CHANGE

22.50%

4.00%

3.01%

1.26

20.00%

GROSS PROFIT MARK-UP INDEX

1.26

25.00%
20.00%

3.00%
2.00%

1.25

17.50%

1.00%

1.25

15.00%

15.00%

12.50%
10.00%

10.00%

8%

-2.00%

1.23

6%
4%

5.00%

-1.00%

-0.82%

1.24

9%

7.50%
5.00%

0.00%

1.24

-3.00%

-2.68%

1.23

-4.00%

1.22

2.50%

1.22

0.00%

0.00%

2007

2008

2009

2007

2010

#4 OPERATING EXPENSE CONTROL


NOI$

GP$

NOI%

GP%

CORE OPER EXP%


$3,500,000

25.00%

$3,000,000
20.00%

2008

2009

2006

2010

2007

CFBF ACTUAL

2008

2009

-6.00%

2010

#6 DEBT FREE CASH FLOW

#5 EBITDA to ACTUAL CASH FLOW


EBITDA

-5.00%

-4.94%

Log. (CFBF ACTUAL)

CFBF ACTUAL
$1,500,000

2,500,000
2,000,000

CFBF DEBT FREE

ADJUSTED CFBF DEBT FREE

$1,000,000

1,500,000
$2,500,000

$500,000

1,000,000

15.00%

$2,000,000

500,000

$0

10.00%

$1,500,000

($500,000)

$1,000,000

(500,000)

($1,000,000)

(1,000,000)

5.00%
$500,000
0.00%

$0

2006

2007

2008

2009

($1,500,000)

(1,500,000)
(2,000,000)

2010

($2,000,000)

2007

CASH BALANCE

2009

2010

2007

#8 RETURN on ASSETS (ROA)

#7 USE of EXCESS CASH


CASH GENERATION
$2,500,000

2008

RETURN on ASSETS

EXCESS NET CASH

ADJUSTED ROA

2008

2009

2010

#9 WORKING CAPITAL NEEDS

EFFICIENT ROA

CASH

14.00%

$9,000,000

$2,000,000

12.00%

$8,000,000

$1,500,000

10.00%

$1,000,000

8.00%

$5,000,000

$500,000

6.00%

$4,000,000

$0

4.00%

($500,000)

2.00%

($1,000,000)

0.00%

ARs

INVENTORY

ACCTS PAYABLE

WC Need

$7,000,000
$6,000,000

$3,000,000
$2,000,000

2007

2008

2009

$1,000,000
$0

2010

2007

#10 USE of DEBT FINANCING


TOTAL ASSETS

EQUITY

LONG TERM DEBT

2008

2009

2006

2010

CURRENT LIAB

AR Cash

INV CASH

AP Cash

Cash Conversion

ADJ COST of CAPITAL %

NTC Days

$16,000,000

$2,000,000

120

14.00%

$14,000,000

$1,500,000

100

12.00%

$12,000,000

$1,000,000

$10,000,000

2007

2008

2009

2010

#12 ECONOMIC VALUE ADDED (EVA)

#11 NET TRADE CYCLE

80

$500,000

$8,000,000

ROA %

ROI %

EVA$

$0
($500,000)

10.00%
8.00%

($1,000,000)

6.00%

($1,500,000)

60

$0

$6,000,000

40

($500,000)

$4,000,000

($1,000,000)

$2,000,000
$0

($1,500,000)

2006

2007

2008

2009

2010

2007

2008

2009

2010

4.00%

20

2.00%

0.00%

($2,000,000)
($2,500,000)

2007

2008

2009

2010

REAL REVENUE GROWTH

SUSTAINABLE REVENUE GROWTH

#1
#2

PRICING POLICY

#3

OPERATING EXPENSE CONTROL

#4

EBITDA to ACTUAL CASH FLOW

DEBT FREE CASH FLOW

#5
#6

USE of EXCESS CASH

#7

RETURN on ASSETS (ROA)

#8

WORKING CAPITAL NEEDS

USE of DEBT FINANCING

NET TRADE CYCLE

ECONOMIC VALUE ADDED (EVA)

#9
#10
#11
#12

Real revenue growth reflects the actual real increase or decrease year by year in your business sales. Price increases or decreases
are measured by the year to year change in the gross profit mark-up index. Real revenue growth shows us the annual growth in
revenues adjusted for the effect of annual over-all increases or decreases in the gross profit mark-up or mark-down. This can be
due to increase or decrease in the end pricing to the buyers or due to decreases or increases in the costs of goods sold. Real
revenue growth is similar to an additional adjustment to prices for annual inflation or deflation.

$0

The annual change in retained earnings in relation to equity if you use debt financing or total assets (if no debt financing) tells one
how fast or slow the revenues can change in the following year. Have you ever heard the term growing broke? That term means
growing annual revenues so fast that they consume the resources of the balance sheet faster than they can be replenished. Where
do additional resources primarily come from from retained earnings or the portion of annual net income you leave in or reinvest in
your business.

$0

We use the gross profit mark-up index to develop pricing policy. This index measures revenue divided by cost of goods sold,
resulting in an index. The annual change in this index plus or minus shows the increase or decrease in over-all pricing. Real
revenue growth as defined above is derived by subtracting the over-all pricing index from the nominal annual revenue change. For
many companies it would be impossible to add up a bunch of widgets, compare to the prior year, and know how much more volume
was produced. This can be daunting for even the well-organized firm. So this is how one can ferret out price increases or decreases
over-all year by year.
Operating expenses are expressed as a percentage of revenues. This percentage is typically compared to net income margin or net
income to revenues. Statistics are used to determine if the operating expenses are moving in or out of control and the magnitude of
any change. These statistics will tell one how sustainable operating expense improvements really are. Core operating expenses are
tracked in order to find different levels of economies of scale.
EBITDA means earnings before interest expense, taxes, annual depreciation expense and amortization. EBITDA is typically used by
banks to assess the ability of a firm to pay back debt financing. EBITDA ignores several issues critical to any business. It ignores
interest expenses, income taxes, annual changes in working capital, and annual capital expenditures to maintain the on-going viable
business operation. Without making working capital investments and capital expenditures, the business would begin to decline and
ultimately to fail. EBITDA is compared to annual cash flow before financing - IT SHOULD NOT BE USED for cash flow.
Cash flow before financing with after tax interest expense added back shows a companys debt-free cash flow after tax. This is the
most meaningful cash flow for any business and should be followed consistently and frequently. This number is what is followed to
determine sustainable annual cash flow. This is the real driver of increasing business value without reservation. It is very difficult to
game this figure which is another valuable characteristic of this metric.
How a company manages its cash is a critical job that most companies do not really understand. Poor cash management can harm
the companys performance in subtle but serious ways. It lowers the return on assets and it increases the cost of capital. Holding
excess cash dulls the companys operating edge which increases overall risk and produces overly confident management. When
the cash balance exceeds the actual working capital cash balance need then that excess cash balance is unnecessary to the firms
financial operations. Increasing or decreasing excess cash balances is a leading indicator of future good or bad times for the
company.
Assets means the firms total assets. The return on assets is calculated as net income after tax plus after- tax interest expense
added back in as net income. The result is divided by total assets to arrive at the Return on Assets (ROA). ROA can then be
compared to other returns on investments with similar risk profiles. For instance, if your business is only returning 4% ROA
compared to say the yield on a junk municipal bond at 6%, one would conclude that the business is probably underperforming for
the risk taken to have all the assets tied up in an illiquid business operation.

$0

$0

$0

$0

$0

$0

Working capital is the interaction of the current assets and current liabilities. Accounts receivable and inventory (if applicable) are
the main drivers of current assets and accounts payable and other payables are the main drivers of the current liabilities. The
current liabilities fund to some extent the current assets. Mismatching the working capital will cause consistent and costly problems
for the company. Knowing the potential need for capital in the working capital is an important metric for determining the future
financing of the business whether short, medium, or long term.

$0

The total debt or total liabilities will be different in each industry and with each business depending on the company's risk tolerance.
Long term debt financing should be used for long term asset financing and short term debt for working capital. Total annual interest
expense percentage to revenues should not exceed the net operating income margin as a percentage to revenues. This is what is
termed negative leverage. Negative leverage should be avoided at all costs. The use of debt financing is a critical component to
management of a companys cost of capital and cash flow, and proper use of debt lowers the over-all cost of capital.

$0

The measurement of average days to annual revenues tied up in accounts receivable, inventory and accounts payable is used to
determine the net trade cycle or cash conversion cycle. It tells a company how fast cash goes through its sale or trade cycle before
coming back out as cash again. The shorter the days in the NTC or CCC the better in most cases. The days in accounts receivable
plus the days in inventory less the days in accounts payable will produce the NTC days. This is a critical metric in managing the
business operations.

$0

Economic value added is a long term goal that every firm should follow without exception. This calculation determines the actual
cost of your capital (COC) both debt and equity combined as compared to the return on assets or ROA. The ROA needs to exceed
the COC in order to add premium value to the business over and above the book net equity. When the ROA falls under COC the
firm is destroying capital employed in the business. This would be the same as selling your products or services below the cost to
produce them. You can only do that for so long before bad things begin to happen to the business.

$0

Income Statement
Gross Revenues
COGS
Gross Profit
Operating Expense (including items below)
Operating Expense (Less Items Below)
Officers' Salaries
Depreciation
Amortization
Total Expenses
Operating Income/Loss
Interest Income
Other Income
Total Other Income
Other Expense (-)
Interest Expense ( - )
Total Other Expense
Pre-Tax Income
Income Tax Expense
Net Income After Tax
Balance Sheet
ASSETS
Current Assets
Cash
Short Term Investments
Accounts Receivable - Net
Inventories
WIP
Advances & Other Current Assets
Prepaid Expenses
Total Current Assets
Fixed Assets
Plant and Equipment
Buildings & Leasehold Improvements
Land
Accumulated Depreciation
Net Plant Equipment
Other Intangible Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Accounts Payable
Other Current Liabilities
Unearned Income/Deposits
Line of Credit
Other Short Term Loans
Current Portion of Long Term Debt
Total Current Liabilities
Long Term Liabilities
Long Term Debt
Other Liabilities
Other Loans Payable
Shareholder loans
Short/Current Long Term Debt
Net Long Term Liabilities
Total Liabilities
STOCKHOLDER EQUITY
Common Stock
Preferred Stock
Additional Paid In Capital
Dividends
Retained Earnings
Treasury Stock
Net Income
Other Stockholder Equity
Total Stockholder Equity
Total Liabilities & Stockholder Equity

2007

2008

2009

2010

2011

10,129,000
8,123,000

12,455,000
9,914,000

13,861,000
11,109,000

14,600,000
11,725,000

16,240,000
13,200,000

2,006,000

2,541,000

2,752,000

2,875,000

3,040,000

1,186,000

1,481,000

1,533,000

1,630,000

1,667,000

1,049,000

1,295,000

1,260,000

1,295,000

1,125,000

137,000
0

186,000
0

273,000
0

335,000
0

542,000
0

1,186,000

1,481,000

1,533,000

1,630,000

1,667,000

820,000

1,060,000

1,219,000

1,245,000

1,373,000

0
0

0
0

0
0

0
0

0
0

0
(41,000)

0
(27,000)

0
(33,000)

0
(61,000)

0
(71,000)

(41,000)

(27,000)

(33,000)

(61,000)

(71,000)

779,000
322,000

1,033,000
320,000

1,186,000
310,000

1,184,000
440,000

1,302,000
375,000

457,000

713,000

876,000

744,000

927,000

2007

2008

2009

2010

2011

767,000

509,000

892,000

2,210,000

4,262,000

6,051,000

4,914,000

5,536,000

5,877,000

285,000
0

367,000
0

551,000
0

499,000
0

592,000
0

5,314,000

6,927,000

6,357,000

8,245,000

7,285,000

1,177,000

1,312,000

1,505,000

1,750,000

1,862,000

0
(634,000)

0
(698,000)

0
(796,000)

0
(956,000)

543,000

614,000

709,000

794,000

816,000

0
0
(1,018,000)
844,000

2,610,000

3,024,000

3,913,000

4,773,000

6,621,000

8,467,000

10,565,000

10,979,000

13,812,000

14,750,000

2007

2008

2009

2010

2011

1,545,000

2,223,000

1,494,000

1,665,000

1,515,000

1,930,000

2,650,000

2,830,000

3,070,000

3,045,000

0
0

0
0

0
0

0
0

0
0

3,475,000

4,873,000

4,324,000

4,735,000

4,560,000

810,000

533,000

653,000

1,225,000

1,421,000

0
0

0
0

0
0

0
0

0
0

810,000

533,000

653,000

1,225,000

1,421,000

4,285,000

5,406,000

4,977,000

5,960,000

5,981,000

10,000

10,000

10,000

10,000

10,000

0
0

0
0

0
0

0
0

0
0

10,000

10,000

10,000

10,000

10,000

0
3

Tetra Tech, Inc. is a provider of consulting, engineering, program management, construction management and technical
services focusing on resource management, infrastructure and the environment. The Company serves public and private
clients by addressing the fundamental needs for water, natural resources, environmental services, infrastructure and energy.
Its solutions span the entire life cycle of the project and include applied science, research and technology, engineering,
design, construction management, construction, operations and maintenance, and information technology. The Company
operates in four segments: Engineering and Consulting Services (ECS), Technical Support Services (TSS), Engineering and
Architecture Services (EAS) and Remediation and Construction Management (RCM). On August 6, 2010, the Company
acquired EBA Engineering Consultants, Ltd. On October 4, 2010, Tetra Tech, Inc. acquired BPR, Inc., a Canadian scientific
and engineering services firm. SOURCE: GOOGLE

ENGINEERING FIRM

April 20, 2011

CONTINUE

Privately Held Company - Financials Calendar Year End - Accrual Basis

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WARNING

Financial data provided through ENGINEERING FIRM. The financial statements are NOT audited or assured by BUSINESS FERRET LLC.
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INCOME STATEMENT
REVENUES

2006

2007

2008

2009

(all numbers in 1,000s)


Annualizing Factor

GROSS REVENUES:
Other Revenues
Other Revenues
Returns, Refunds, and Discounts
Write-downs

TOTAL NET REVENUES

$10,129,000
0
0
0
0
$10,129,000

$12,455,000
0
0
0
0
$12,455,000
22.96%
0.75%
22.21%
29.62
2,326,000

Costs of Revenues Margin


Annual Percentage Increase or Decrease Costs of Revenues

Gross Profit Margin


Annual Percentage Increase or Decrease in Gross Profit Dollars

$2,752,000
19.85%
8.30%
-2.68%
$1,406,000
$211,000
15.01%

$2,875,000
19.69%
4.47%
-0.82%
$739,000
$123,000
16.64%

$3,040,000
18.72%
5.74%
-4.94%
$1,640,000
$165,000
10.06%

2.60%

-4.85%

-3.05%

-8.66%

GROSS PROFIT CHANGE to REVENUE CHANGE in PERCENTAGE

REVENUE PRICING POLICY

535,000

1.25

1,195,000

211,000

11,725,000
80.31%
5.55%
616,000

123,000

$13,457,000
0
0
0
0
$13,457,000

CORE OPERATING EXPENSE (excluding deprec. & amort. exp.)


OTHER EXPENSES ADJUSTMENTS
DEPRECIATION EXPENSE (from COGS & operating exp.)
AMORTIZATION EXPENSE (from operating exp.)

-0.33%
11.25%
18.83

13,200,000
81.28%
12.58%

TOTAL EXPENSES:
Total Expenses to Revenues
Annual Percentage Increase or Decrease in Operating Expense
Total Core Operating Expenses to Revenues

DIFFERENCE between GP & EXPENSE NET ANNUAL % CHANGE

STANDARD
DEVIATION

11

12

PROBABILITY

LINKAGE TO
REVENUES

WEIGHTED AVERAGE REAL REVENUE GROWTH RATE


WEIGHTED AVERAGE PRICE ELASTICITY

$2,642,800
19.69%
11.30%

18.72%

19.64%

10.95%

399,840

15.13%

98.54%

1,475,000

165,000

$9,832,637
($296,363)

$12,455,000
$0

$13,489,240
($371,760)

$14,092,139
($507,861)

$14,900,905
($1,339,095)

$12,953,984
($503,016)

2006

2007

2008

2009

2010

AVERAGE

6.93%

4.79%

-1.86%

3.47%

246,000

(35,000)

35,000

(170,000)

GP CHG

GP %
21%
21%

20%
AVERAGE

1.25

1.80%

COGS CHG

$2,000,000

-0.33%
-0.16%
($56,273)

$1,125,000
0
542,000
0
1,667,000
10.26%
2.27%

#13 INCREMENTAL ANNUAL CHANGES


REV CHG
$2,500,000

1.23

8.87%

100.00%
3.56%

99.94%

-1.20%
-1.33%
($194,320)
($216,267)

9.09%

17.15%
ASSET BASED

17.70%

1.25

10.40%

100.00%

1,914,512

-0.20%
-0.14%
($29,540)
($19,730)

10.36%

17.15%

12.91%

1.25

$1,295,000
0
335,000
0
1,630,000
11.16%
6.33%

12.53%

2,307,290
0
0
0
0
2,307,290
6.80%

80.36%

-0.68%
0.07%
($94,633)
$9,313

$1,260,000
0
273,000
0
1,533,000
11.06%
3.51%

12.53%

81.28%

1.26

$1,295,000
0
186,000
0
1,481,000
11.89%
24.87%

100.00%
0.00%
0.00%
0.00%
0.00%
100.00%

10,814,200
80.31%
13.06%

0.75%
0.75%
$93,402
$93,402

$1,049,000
0
137,000
0
1,186,000
11.71%

100.00%
0.00%
0.00%
0.00%
0.00%
100.00%

AVERAGE SUSTAINABLE REVENUE GROWTH EQUITY BASED

$1,500,000

20%

$1,000,000

19%
19%

$500,000

OPERATING EXPENSES
(all numbers in 1,000s)

GROWTH
RATE in
DOLLARS

1,640,000

$2,541,000
20.40%
26.67%
3.01%
$2,326,000
$535,000
23.00%

ANNUAL GROSS PROFIT CHANGE in $'s

11,109,000
80.15%
12.05%

739,000

$16,240,000
0
0
0
0
$16,240,000
11.23%
-1.20%
12.43%
10.39

$2,006,000
19.80%

ANNUAL REVENUE CHANGE in $'s

REVENUES REQUIRED to MAINTAIN GP$ w/ HIGHEST GP MARGIN


REVENUE DECLINE POSSIBLE still MAINTAINING GP DOLLARS

1,406,000

$14,600,000
0
0
0
0
$14,600,000
5.33%
-0.20%
5.53%
27.35

9,914,000
79.60%
22.05%

ANNUAL CHANGE in BASE GP MARGIN % DUE to MARK-UP INDEX CHANGE

GROSS PROFIT MARK-UP INDEX


PERCENTAGE DIFFERENCE of INDEX (from One Year to the Next)
CUMULATIVE ANNUAL PERCENTAGE DIFFERENCES
ANNUAL PERCENTAGE times ANNUAL REVENUES
CUMULATIVE ANNUAL PERCENTAGE times ANNUAL REVENUES

$13,861,000
0
0
0
0
$13,861,000
11.29%
-0.68%
11.97%
17.53

8,123,000
80.20%

1,791,000

GROSS PROFIT

AVERAGE

% of
AVERAGE
REVENUES

1st Qtr

Annual Percentage Increase or Decrease in Net Revenues


ANNUAL PRICING CHANGES
NET ANNUAL PRICE ADJUSTED REVENUE GROWTH
PRICE ELASTICITY (sensitivity to price changes)

COSTS OF REVENUES (net of depreciation) same as COGS

2010

% of
CURRENT
REVENUES

DANGER

10

$1,204,800
0
294,600
0
1,499,400
11.22%
9.25%

18%

$0

18%

2007
% of
CURRENT
REVENUES

% of
AVERAGE
REVENUES

2008
GROWTH
RATE in
DOLLARS

2009
STANDARD
DEVIATION

2010
PROBABILITY

LINKAGE TO
REVENUES

6.93%
0.00%
3.34%

8.95%

1.76%

111,760

9.28%

32.13%

2.19%

41.03%

158,064

53.65%

93.18%

10.26%

11.14%

8.88%

190,285

12.69%

96.27%

9.13%

2.05%

Financial data provided through ENGINEERING FIRM. The financial statements are NOT audited or assured by BUSINESS FERRET LLC.
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NET OPERATING INCOME or (LOSSES)


(all numbers in 1,000s)

2006

NET OPERATING INCOME or (LOSS) or NOI

$820,000
8.10%

Net Operating Income to Revenues


Annual Percentage Increase or Decrease in NOI

2007

ANNUAL NOI CHANGE in $'s


NOI CHANGE to REVENUE CHANGE in PERCENTAGE

240,000

OTHER INCOME
INTEREST INCOME
GAIN on SALE of ASSETS
OTHER
OTHER
TOTAL OTHER INCOME
OTHER EXPENSE
INTEREST EXPENSE
ANNUAL INTEREST RATE ON ALL INTEREST BEARING DEBT
LOSS on SALE of ASSETS
OTHER
OTHER
TOTAL OTHER EXPENSE

0
0
0
0
0

(41,000)
5.06%
0
0
0
(41,000)
7.7%

PRE-TAX INCOME
LESS INCOME TAXES @ 35% or REFUNDS
NET INCOME AFTER TAX
PLUS DEPRECIATION AND AMORTIZATION
GROSS AFTER TAX CASH FLOW
GROSS AFTER TAX CASH FLOW MARGIN
EBIT $
EBIT MARGIN
EBITDA $
EBITDA MARGIN
CASH FLOW BEFORE FINANCING - DEBT FREE
CASH FLOW BEFORE FINANCING MARGIN
ADJ. CASH FLOW BEFORE FINANCING - DEBT FREE
ADJ. CASH FLOW BEFORE FINANCING MARGIN
ACTUAL CASH FLOW BEFORE FINANCING
ADJ. CASH FLOW BEFORE FINANCING MARGIN

2008

$1,060,000
8.51%
29.27%
$240,000
10.32%

2009

$1,219,000
8.79%
15.00%
$159,000
11.31%
159,000

0
0
0
0
0

(27,000)
5.07%
0
0
0
(27,000)
8.3%

2010

$1,245,000
8.53%
2.13%
$26,000
3.52%
26,000

0
0
0
0
0

(33,000)
5.05%
0
0
0
(33,000)
8.6%

AVERAGE

$1,373,000
8.45%
10.28%
$128,000
7.80%

$1,143,400
8.48%
14.17%

% of
CURRENT
REVENUES

% of
AVERAGE
REVENUES

8.45%

(61,000)
4.98%
0
0
0
(61,000)
8.1%

8.50%

RESTORING AVG. NOI %

13.75%
0.50%

10

11

12

STANDARD
DEVIATION

PROBABILITY

LINKAGE TO
REVENUES

212,307

18.57%

REVs. to RESTORE $ MARGIN

99.29%
($2,715,735)

8.24%

128,000

0
0
0
0
0

GROWTH
RATE in
DOLLARS

#14 INCREMENTAL ANNUAL CHANGES


0
0
0
0
0

(71,000)
5.00%
0
0
0
(71,000)
8.0%

0
0
0
0
0

(46,600)
5.03%
0
0
0
(46,600)
8.2%

GP CHG
$600,000

OPER EXP CHG

NOI CHG

NET INC %
8.60%

$500,000

8.50%

$400,000

8.40%

$300,000

8.30%

$200,000

8.20%

$100,000

8.10%

$0

8.00%

($100,000)

7.90%

($200,000)

7.80%

($300,000)

$779,000
322,000
457,000
137,000
594,000
5.86%

$1,033,000
320,000
713,000
186,000
899,000
7.22%

$1,186,000
310,000
876,000
273,000
1,149,000
8.29%

$1,184,000
440,000
744,000
335,000
1,079,000
7.39%

$1,302,000
375,000
927,000
542,000
1,469,000
9.05%

$1,096,800
353,400
743,400
294,600
1,038,000
7.56%

8.02%
2.31%
5.71%
9.05%

7.71%

1.04%
2008
13.70%
3.88%
19.34%
41.03%
25.40%

820,000
8.10%
957,000
9.45%

1,060,000
8.51%
1,246,000
10.00%
(227,450)
-1.83%
186,550
1.50%
(245,000)
-1.97%

1,219,000
8.79%
1,492,000
10.76%
317,450
2.29%
1,206,450
8.70%
296,000
2.14%

1,245,000
8.53%
1,580,000
10.82%
(320,350)
-2.19%
539,650
3.70%
(360,000)
-2.47%

1,373,000
8.45%
1,915,000
11.79%
(1,533,850)
-9.44%
314,150
1.93%
(1,580,000)
-9.73%

1,143,400
8.48%
1,438,000
10.57%
(441,050)
-2.79%
561,700
3.96%
(472,250)
-3.01%

8.45%

8.50%

11.79%

10.69%

-9.44%

-3.28%

20078.15%
2.63%
5.52%

1.93%

4.17%

-9.73%

-3.51%

7.70%

2009
201,702
54,661
183,195

2010
18.39%
15.47%
24.64%

98.22%
55.41%
91.61%

322,576

31.08%

97.68%

13.75%

212,307

18.57%

99.29%

18.94%

360,151

25.05%

99.42%

780,967

-177.07%

-76.13%

18.97%

453,948

80.82%

-3.62%

791,951

-167.70%

-76.71%

Financial data provided through ENGINEERING FIRM. The financial statements are NOT audited or assured by BUSINESS FERRET LLC.
1
2
3
4
5
6
7
8
9

1
93
94
95
96
97
98
99
100
101
102
103
104
105
106
107
108
109
110
111
112
113
114
115
116
117
118
119
120
121
122
123

% of

BALANCE SHEET
ASSETS

2006

2007

2008

2009

2010

AVERAGE

REVENUES

(all numbers in 1,000s)

% of

%CURRENT
of CURRENT %AVERAGE
of AVERAGE
TOTAL ASSETS TOTAL ASSETS

REVENUES

GROWTH
RATE in
DOLLARS

10

11

12

STANDARD
DEVIATION

PROBABILITY

LINKAGE TO
REVENUES

CURRENT ASSETS
Cash Balance Excess or (Shortfall)
CASH
ACCOUNTS RECEIVABLE (net of Bad Debt Allowance)
INVENTORIES plus WORK in PROCESS
ADVANCES & OTHER CURRENT ASSETS
PREPAID EXPENSES

TOTAL CURRENT ASSETS

302,000
767,000
4,262,000
0
285,000
0
$5,314,000

(276,000)
509,000
6,051,000
0
367,000
0
$6,927,000

868,000
892,000
4,914,000
0
551,000
0

1,713,000
2,210,000
5,536,000
0
499,000
0

51,000
816,000
5,877,000
0
592,000
0

531,600
1,038,800
5,328,000
0
502,250
0

0.35%
5.53%
39.84%
0.00%
4.01%
0.00%

4.54%
8.87%
45.48%

1.56%
8.36%

781,790
670,347
737,419

147.06%
64.53%
13.84%

23.87%
33.86%
64.97%

4.29%

20.05%

128,931

25.67%

94.48%

$6,357,000

$8,245,000

$7,285,000

$6,825,600

49.39%

58.27%

8.21%

1,088,640

15.95%

76.05%

0.00%
0.00%
12.62%

12.99%

12.15%

287,661

18.91%

96.37%

FIXED ASSETS
LAND
BUILDINGS/LEASE IMPROVEMENTS
PLANT& EQUIPMENT
OFFICE EQUIPMENT
TRANSPORTATION EQUIPMENT
(LESS: ACCUMULATED DEPRECIATION EXPENSE)

TOTAL NET FIXED ASSETS

0
0
1,177,000
0
0
(634,000)
0
$543,000

0
0
1,312,000
0
0
(698,000)

0
0
1,505,000
0
0
(796,000)

0
0
1,750,000
0
0
(956,000)

0
0
1,862,000
0
0
(1,018,000)

1,521,200
0
0
(820,400)

-6.90%

-7.00%

164,130

-20.01%

-94.93%

$614,000

$709,000

$794,000

$844,000

$700,800

5.72%

5.98%

11.66%

124,192

17.72%

97.76%

2,610,000
0
2,610,000

3,024,000
0
3,024,000

3,913,000
0
3,913,000

4,773,000
0
4,773,000

6,621,000
0
6,621,000

4,188,200
0
4,188,200

44.89%
0.00%
44.89%

35.75%

26.20%

1,595,487

38.09%

93.35%

35.75%

26.20%

1,595,487

38.09%

93.35%

$8,467,000

$10,565,000

$10,979,000

$13,812,000

$14,750,000

$11,714,600

100.00%

100.00%

14.89%

2,550,604

21.77%

95.61%

OTHER ASSETS
GOODWILL
OTHER INTANGIBLE ASSETS

TOTAL OTHER ASSETS


TOTAL ASSETS
CASH ADJUSTMENT FACTOR

$302,000

($276,000)

$868,000

$1,713,000

$51,000

$531,600

Financial data provided through ENGINEERING FIRM. The financial statements are NOT audited or assured by BUSINESS FERRET LLC.
1
2
3
4
5
6
7
8
9

1
124
125
126
127
128
129
130
131
132
133
134
135
136
137
138
139
140
141
142
143
144
145
146
147
148
149
150
151
152
153
154
155
156
157
158
159
160
161
162
163
164
165
166
167
168
169
170

LIABILITIES:
CURRENT LIABILITIES
ACCOUNTS PAYABLE
OTHER PAYABLES
UNEARNED INCOME
LINE OF CREDIT
CURRENT PORTION OF LONG TERM DEBT & LEASES
LINE of CREDIT LIMIT $
TOTAL CURRENT LIABILITIES:

2006
2006

2007
2007

$1,545,000
1,930,000
0
0
0

2008
2008

$2,223,000
2,650,000
0
0
0
$

$3,475,000

2009
2009

$1,494,000
2,830,000
0
0
0
$

$4,873,000

2010
2010

AVERAGE

$1,665,000
3,070,000
0
0
0

$1,515,000
3,045,000
0
0
0

$1,688,400
2,705,000
0
0
0

$4,735,000

$4,560,000

$4,393,400

% of
CURRENT
REVENUES
10.27%
20.64%
0.00%
0.00%
0.00%

% of
AVERAGE
REVENUES
14.41%
23.09%

10

GROWTH
RATE in
DOLLARS
-0.49%
12.07%

STANDARD
DEVIATION
306,091
465,859

7.03%

552,887

11

12

LINKAGE TO
REVENUES
18.13%
-22.88%
17.22%
94.16%

PROBABILITY

$
$4,324,000

30.92%
18.47%
12.94%

37.50%
20.76%
11.89%

12.58%

66.67%

WORKING CAPITAL GAP with CASH BALANCE


WORKING CAPITAL GAP without CASH BALANCE

LONG TERM LIABILITIES


LONG TERM DEBT
CAPITAL LEASE
MORTGAGE LOANS
OTHER LOANS PAYABLE
SHAREHOLDERS' LOANS
LESS CURRENT PORTION OF LONG TERM DEBT

$810,000
0
0
0
0
0

$533,000
0
0
0
0
0

$653,000
0
0
0
0
0

$1,225,000
0
0
0
0
0

$1,421,000
0
0
0
0
0

$928,400
0
0
0
0
0

9.63%

7.93%

15.09%

379,747

40.90%

68.16%

TOTAL LONG TERM DEBT

$810,000

$533,000

$653,000

$1,225,000

$1,421,000

$928,400

9.63%

7.93%

15.09%

379,747

40.90%

68.16%

40.55%

45.43%

8.69%

714,628

13.43%

87.80%

36.85%
6.28%

39.85%
6.35%

7.72%
19.34%

603,623
183,195

12.93%
24.64%

93.68%
91.61%

40.59%

43.18%

9.45%

59.45%

54.57%

-12.61%

100.00%

100.00%

OTHER LONG TERM LIABILITIES


DEFERRED TAX LIABILITY
TOTAL LIABILITIES:

$4,285,000

$5,406,000

$4,977,000

$5,960,000

$5,981,000

$5,321,800

$10,000
0
4,037,000
457,000
(322,000)
0
0
4,172,000
0
$4,182,000

$10,000
584,000
4,172,000
713,000
(320,000)
0
0
4,565,000
0
$5,159,000
23.36%

$10,000
861,000
4,565,000
876,000
(310,000)
0
0
5,131,000
0
$6,002,000
16.34%

$10,000
2,407,000
5,131,000
744,000
(440,000)
0
0
5,435,000
0
$7,852,000
30.82%

$10,000
1,324,800
4,668,000
743,400
(353,400)
0
0
5,058,000
0
$6,392,800
20.55%

STOCKHOLDERS' EQUITY
COMMON STOCK - CUMULATIVE
OTHER PAID-IN CAPITAL or DISTRIBUTIONS -Cumulative
RETAINED EARNINGS-BEGINNING
NET INCOME
Tax Effect Distributions
Dividend Distributions
Other Distributions
RETAINED EARNINGS-ENDING
LESS TREASURY STOCK

EQUITY

$8,467,000

$10,565,000

$10,979,000

$13,812,000

$10,000
2,772,000
5,435,000
927,000
(375,000)
0
0
5,987,000
0
$8,769,000
11.68%
$877.00
10,000,000
$8,770,000
100.01%
10.57%
0.00%
$14,750,000

Annual Equity Percentage Changes

Share Price
Shares Outstanding
Market Capitalization of Equity
MV Equity to Book Equity
After-Tax Current Yield on MV Equity (plus dividends)
After-Tax Dividend Yield Based on MV Equity

TOTAL LIABILITIES & NET WORTH


Check

Book Equity Pricing

$11,714,600

14.89%

713,888

14.11%

98.48%

1,893,292

29.62%

95.67%

2,550,604

21.77%

95.61%

Financial data provided through ENGINEERING FIRM. The financial statements are NOT audited or assured by BUSINESS FERRET LLC.
1
2
3
4
5
6
7
8
9

1
171
172
173
174
175
176
177
178
179
180

AVERAGE
AVERAGE

2006

2007

2008

2009

2010

4.51%
83.59%
29.54%
29.54%

5.72%
84.83%
55.12%
137.03%
13.82%
6.52%
10.33%

6.32%
79.21%
64.61%
162.90%
14.60%
7.22%
10.88%

5.10%
94.60%
40.86%
364.38%
9.48%
5.86%
15.60%

5.71%
90.83%
59.55%
358.58%
10.57%
6.05%
16.20%

5.47%
86.61%
49.94%
210.48%
12.12%
6.41%
14.48%

CURRENT YEAR REVENUE GROWTH RATE - NOMINAL

22.96%

11.29%

5.33%

11.23%

12.70%

SUSTAINABLE REVENUE GROWTH:


PROFIT MARGIN TO REVENUES
TOTAL ASSETS TO REVENUES
RETENTION RATIO - CURRENT RETAINED to NET INC.
RETENTION RATIO - CURRENT RETAINED to NET INC. - ADJ.
RETURN ON EQUITY (ROE)
RETURN ON ASSETS (ROA)
DEBT RATIO

19.37%

Green = continue Amber = warning Red = danger


181
182
183
184
185
186
187
188
189

% of
CURRENT
REVENUES

% of
AVERAGE
REVENUES

GROWTH
RATE in
DOLLARS

10

11

12

STANDARD
DEVIATION

PROBABILITY

LINKAGE TO
REVENUES

#15 REVENUE SUSTAINABILITY


NOMINAL REV GROWTH

PRICE ADJ REV

DEBT FINANCED

NO DEBT GROWTH

25.00%
20.00%

PRICE ADJUSTED ANNUAL REVENUE GROWTH RATE

22.21%

11.97%

5.53%

12.43%

13.04%

15.00%

SUSTAINABLE GROWTH (Equity Based)


SUSTAINABLE GROWTH (Equity Based) - adjusted
CURRENT YEAR REVENUE GROWTH RATE - NOMINAL

7.62%
18.94%
22.96%

9.43%
23.78%
11.29%

3.87%
34.53%
5.33%

6.29%
37.91%
11.23%

6.80%
28.79%
12.70%

10.00%

PRICE ADJUSTED ANNUAL REVENUE GROWTH RATE

22.21%

11.97%

5.53%

12.43%

13.04%

3.59%
8.94%

4.66%
11.76%

2.39%
21.35%

3.60%
21.70%

3.56%
15.93%

INTERNAL GROWTH (Asset Based)


INTERNAL GROWTH (Asset Based) - adjusted

5.00%
0.00%

Green = continue Amber = warning Red = danger


190
191
192
193
194
195
196
197
198
199
200
201
202
203
204
205
206
207
208
209
210
211
212
213
214
215
216
217
218
219
220
221
222
223
224
225
226
227

RATIO ANALYSIS:
FLOW RATIO
TOTAL CURRENT ASSETS
Less CASH & CASH EQUIVALENTS
ADJUSTED CURRENT ASSETS (Total less cash & equiv)
TOTAL CURRENT LIABILITIES
FLOW RATIO (Less than 1 desirable)
DEBT RATIO
TIMES INTEREST EARNED
OPERATING LEVERAGE
ACCOUNTS PAYABLE TO REVENUES
LONG TERM DEBT TO TOTAL LIABILITIES
LONG TERM DEBT TO TOTAL ASSETS
TOTAL LIABILITIES TO TOTAL ASSETS
TOTAL DEBT +/-$ TO REVENUES +/- $

2007

2006

2007

2008

2009

2010

AVERAGE

$5,314,000
767,000
4,547,000
3,475,000
1.31

$6,927,000
509,000
6,418,000
4,873,000
1.32
104.79%
39.26
58.28%
17.85%
9.86%
5.04%
51.17%
$0.48

$6,357,000
892,000
5,465,000
4,324,000
1.26
82.92%
36.94
55.70%
10.78%
13.12%
5.95%
45.33%
($0.31)

$8,245,000
2,210,000
6,035,000
4,735,000
1.27
75.90%
20.41
56.70%
11.40%
20.55%
8.87%
43.15%
$1.33

$7,285,000
816,000
6,469,000
4,560,000
1.42
68.21%
19.34
54.84%
9.33%
23.76%
9.63%
40.55%
$0.01

$6,825,600
1,038,800
5,786,800
4,393,400
1.32
82.96%
0.00
56.38%
12.34%
16.82%
7.37%
45.05%
$0.38

1.42
1.42
7.35%
10.45%
$2,054,000
$3,828,000
$2,054,000
$1,521,000
19.44%

1.47
1.47
14.03%
20.63%
$2,033,000
$3,420,000
($21,000)
$1,380,000
18.52%

1.74
1.74
26.80%
46.67%
$3,510,000
$3,871,000
$1,477,000
$2,285,000
25.41%

1.60
1.60
11.20%
17.89%
$2,725,000
$4,362,000
($785,000)
$1,304,000
18.47%

1.56
1.56
14.85%
23.91%
$2,580,500
$3,870,250
$681,250
$1,622,500
20.46%

REVENUES TO TOTAL ASSETS


WORKING CAPITAL TO REVENUES
ADJUSTED WORKING CAPITAL TO REVENUES
FIXED ASSETS TO REVENUES
ACCOUNTS RECEIVABLE TO REVENUES
REVENUES TO INVENTORY
NET INCOME +/-$ TO REVENUES +/-$
GROSS PROFIT MARGIN
NET PROFIT MARGIN

1.18
16.49%
30.73%
4.93%
48.58%

1.26
14.67%
24.67%
5.12%
35.45%

1.06
24.04%
26.51%
5.44%
37.92%

1.10
16.78%
26.86%
5.20%
36.19%

$0.11
20.40%
5.72%

$0.12
19.85%
6.32%

($0.18)
19.69%
5.10%

$0.11
18.72%
5.71%

2009

2010

2006

2007

2008

>Yrly Dep Exp

-137,000.00

-186,000.00

-273,000.00

-335,000.00

-542,000.00

>Gross Fixed

1,177,000.00

1,312,000.00

1,505,000.00

1,750,000.00

1,862,000.00

2009

2010

-634,000.00

-698,000.00

-796,000.00

-956,000.00

-1,018,000.00

-698,000.00

Assets (GFA)
>Accumulated
Depreciation
-796,000.00

-956,000.00

-1,018,000.00

-186,000.00

-273,000.00

-335,000.00

-542,000.00

>Beg Acct Deprc

-512,000.00

-523,000.00

-621,000.00

-476,000.00

>Prior Actual

-634,000.00

-698,000.00

-796,000.00

-956,000.00

122,000.00

175,000.00

175,000.00

480,000.00

1,177,000.00

1,312,000.00

1,505,000.00

1,750,000.00

Accum Deprc
>Difference
>Prior Yr GFA

CURRENT RATIO
QUICK RATIO
CASH RATIO
CASH TO CURRENT LIAB.
WORKING CAPITAL
ADJUSTED WORKING CAPITAL (AWC)
CHANGE IN WORKING CAPITAL
NET WORKING CAPITAL
WORKING CAPITAL TO TOTAL ASSETS

2008

Minus Difference

122,000.00

175,000.00

175,000.00

480,000.00

1,055,000.00

1,137,000.00

1,330,000.00

1,270,000.00

>Current GFA

1,312,000.00

1,505,000.00

1,750,000.00

1,862,000.00

>Adj Prior GFA

1,055,000.00

1,137,000.00

1,330,000.00

1,270,000.00

CAPEX

257,000

368,000

420,000

592,000

1.15
17.99%
27.20%
5.17%
39.54%
#DIV/0!
$0.04
19.67%
5.71%

Financial data provided through ENGINEERING FIRM. The financial statements are NOT audited or assured by BUSINESS FERRET LLC.
1
2
3
4
5
6
7
8
9

1
228
229
230
231

RETURN ON ASSETS (ROA)


ROA excluding other assets
ROA excluding other assets & excess cash or add deficit
RETURN ON ASSETS (ROA) with EFFICIENT FINANCING ONLY
RETURN ON ASSETS (ROA) with EFFICIENT FINANCING & FULLY ADJ.

232
233
234
235
236
237
238
239
240
241
242
243
244
245
246
247
248
249
250
251
252
253
254
255
256
257
258
259
260
261
262
263
264
265
266
267
268
269
270
271
272
273
274
275
276
277
278
279
280
281
282
283
284
285

DEBT LOAN CONSTANT


DEBT LOAN CONSTANT asset weighted
DEBT LOAN CONSTANT asset weighted & tax adjusted
RETURN ON GROSS FIXED ASSETS
RETURN ON EQUITY (ROE)
GROSS AFTER TAX CASH FLOW
GROSS AFTER TAX CASH FLOW TO SALES
EMPLOYEES (FTEs) INCLUDING ANY OWNER OPERATORS
REVENUES PER FULL TIME EMPLOYEE

2006

0
#DIV/0!

6.52%

7.22%

5.86%

6.05%

20079.14%

2008
11.21%

20098.95%

2010
10.98%

8.81%

12.78%

11.05%

11.05%

6.03%
13.10%

7.83%
19.65%

6.50%
16.69%

5.83%
16.57%

5.07%
100.41%
65.27%
54.34%
13.82%
$899,000
7.22%
0
#DIV/0!

5.05%
84.97%
55.23%
58.21%
14.60%
$1,149,000
8.29%
0
#DIV/0!

4.98%
56.15%
36.49%
42.51%
9.48%
$1,079,000
7.39%
0
#DIV/0!

5.00%
51.86%
33.71%
49.79%
10.57%
$1,469,000
9.05%
12,000
$1,353,333

6.41%
AVERAGE
10.07%
10.92%

6.55%
16.50%
5.02%
73.35%
47.68%
51.21%
12.12%
$1,149,000
7.99%
2,400
#DIV/0!

% of
CURRENT
REVENUES
ROA

10

11

12

% of
GROWTH
STANDARD
AVERAGE
RATE in
PROBABILITY
DEVIATION
REVENUES #16
DOLLARS
RETURNS on ASSETS
ROA less OTHER

ROA FULLY ADJ

LINKAGE TO
REVENUES

ROA FINANCIAL EFFICIENT

25.00%
TOTAL LOAN CONSTANT

20.00%
15.00%

10.00%
5.00%

2006

DUAL CASH FLOW ANALYSIS:


NET INCOME
PLUS: DEPRECIATION
PLUS OTHER
MINUS: INCOME TAX ACTUAL or @ 35% APPLIED
GROSS CASH FLOW (GCF)
Percentage to Revenues
ACCOUNTS RECEIVABLE - DECR/(INCR)
INVENTORY - DECR/(INCR)
OTHER CURRENT ASSETS - DECR/(INCR)
ACCOUNTS PAYABLE - INCR/(DECR)
OTHER CURRENT LIABILITIES - INCR/(DECR)
OPERATING CASH FLOW (OCF)
Percentage to Revenues
FIXED ASSETS - DECR/(INCR)
OTHER INVESTMENTS - DECR/(INCR)
INVESTING CASH FLOW (ICF)
Percentage to Revenues
CASH FLOW BEFORE FINANCING (CFBF)
Percentage to Revenues
CASH FLOW BEFORE FINANCING - adjusted
Conversion Ratio of Gross Cash Flow to CFBF adj
Percentage to Revenues
SHORT TERM DEBT - INCR/(DECR)
LONG TERM DEBT - INCR/(DECR)
DEBT FINANCING CASH FLOW (DFCF)
Percentage to Revenues
CAPITAL STOCK - INCR/(DECR)
PAID-IN or DISTRIBUTION ADJMT. - INCR/(DECR)
DISTRIBUTIONS - DIVIDENDS, TAX, & OTHER
TREASURY STOCK - INCR/(DECR)
EQUITY FINANCING CASH FLOW (EFCF)
Percentage to Revenues
FINANCING CASH FLOW (FCF)
GROSS CASH FLOW (GCF)
OPERATING CASH FLOW (OCF)
INVESTING CASH FLOW (ICF)
FINANCING CASH FLOW
COMPREHENSIVE CASH FLOW (CCF)
Conversion Ratio of Gross Cash Flow to CCF
CASH BALANCE CHANGE
Difference

2007

2008

2009

2010

AVERAGE

$1,033,000
186,000
0
320,000
$899,000
7.22%
(1,789,000)
0
(82,000)
678,000
720,000
($473,000)
-3.80%
($257,000)
(414,000)
($671,000)
-5.39%
($245,000)
-1.97%
169,000
18.80%
-1.97%
0
(277,000)
($277,000)
-2.22%
0
584,000
(320,000)
0
$264,000
2.12%
($13,000)

$1,186,000
273,000
0
310,000
$1,149,000
8.29%
1,137,000
0
(184,000)
(729,000)
180,000
$404,000
2.91%
($368,000)
(889,000)
($1,257,000)
-9.07%
$296,000
2.14%
1,185,000
103.13%
2.14%
0
120,000
$120,000
0.87%
0
277,000
(310,000)
0
($33,000)
-0.24%
$87,000

$1,184,000
335,000
0
440,000
$1,079,000
7.39%
(622,000)
0
52,000
171,000
240,000
($159,000)
-1.09%
($420,000)
(860,000)
($1,280,000)
-8.77%
($360,000)
-2.47%
500,000
46.34%
-2.47%
0
572,000
$572,000
3.92%
0
1,546,000
(440,000)
0
$1,106,000
7.58%
$1,678,000

$1,302,000
542,000
0
375,000
$1,469,000
9.05%
(341,000)
0
(93,000)
(150,000)
(25,000)
($609,000)
-3.75%
($592,000)
(1,848,000)
($2,440,000)
-15.02%
($1,580,000)
-9.73%
268,000
18.24%
-9.73%
0
196,000
$196,000
1.21%
0
365,000
(375,000)
0
($10,000)
-0.06%
$186,000

$1,176,250
334,000
0
361,250
$1,149,000
8.54%
(403,750)
0
(76,750)
(7,500)
278,750
($209,250)
-1.55%
($409,250)
(1,002,750)
($1,412,000)
-10.49%
($472,250)
-3.51%
530,500
46.17%
-3.51%
0
152,750
$152,750
1.14%
0
693,000
(361,250)
0
$331,750
2.47%
$484,500

899,000
(473,000)
(671,000)
(13,000)
($258,000)
-28.70%
($258,000)
0

1,149,000
404,000
(1,257,000)
87,000
$383,000
33.33%
$383,000
0

1,079,000
(159,000)
(1,280,000)
1,678,000
$1,318,000
122.15%
$1,318,000
0

1,469,000
(609,000)
(2,440,000)
186,000
($1,394,000)
-94.89%
($1,394,000)
0

1,149,000
(209,250)
(1,412,000)
484,500
$12,250
0.09%
$12,250

0.00%

2007

2008

2009

2010

#17 CASH FLOWS


GROSS CF
$2,000,000

WORKING CAPITAL CF

INVESTING CF

$1,500,000
$1,000,000
$500,000
$0
($500,000)
($1,000,000)

2007

2008

2009

2010

#18 CASH FLOWS


CFBF

DEBT FINANCE

NET EQUITY

$1,500,000
$1,000,000

$500,000
$0
($500,000)
($1,000,000)
($1,500,000)
($2,000,000)

2007

2008

2009

2010

Financial data provided through ENGINEERING FIRM. The financial statements are NOT audited or assured by BUSINESS FERRET LLC.
1
2
3
4
5
6
7
8
9

1
286
287
288
289
290
291
292
293
294

2006

HISTORICAL CAPITALIZED CASH FLOW VALUE:

2007

2008

2009

2010

WEIGHTED
AVERAGE
AVERAGE
VALUE

GROSS CASH FLOW


OPERATING CASH FLOW
ADD BACK AFTER TAX INTEREST EXPENSE
INVESTING CASH FLOW (less investment changes)
ADJUSTMENTS TO CASH FLOW (after tax)
DEBT FREE CASH FLOW BEFORE FINANCING

$899,000
(473,000)
17,550
(257,000)
$0
$186,550

$1,149,000
404,000
21,450
(368,000)
$0
$1,206,450

$1,079,000
(159,000)
39,650
(420,000)
$0
$539,650

$1,469,000
(609,000)
46,150
(592,000)
$0
$314,150

TOTAL ASSETS to NET INCOME (after tax) - CURRENT YEAR

14.46

12.23

17.63

15.16

15.14

296

TOTAL ASSETS to EBITDA - CURRENT YEAR

8.48

7.36

8.74

7.70

8.15

297
298
299
300

TOTAL ASSETS to DEBT FREE CASH FLOW - CURRENT YEAR

56.63

9.10

25.59

46.95

21.40

1.50%

1.50%

8.00%
6.50%

CAP RATE
P/E RATIO

1.50%

CAPITALIZED GROSS VALUE


MINUS TOTAL LIABILITIES

REMARKS:

MARKET VALUE NET WORTH


MARKET VALUE TO BOOK NET WORTH
PLUS or MINUS WORKING CAPITAL CASH
TOTAL GROSS MARKET VALUE (GMV) to NET INCOME (after tax) - CURRENT YEAR
TOTAL GROSS MARKET VALUE (GMV) to EBITDA - CURRENT YEAR
TOTAL GROSS MARKET VALUE (GMV) to DEBT FREE CASH FLOW - CURRENT YEAR
GROSS EXTERNAL FINANCING NEED (EFN):
(using current assets and current liabilities)
REVENUES
CURRENT ASSETS TO REVENUES
CURRENT LIABILITIES TO REVENUES
CHANGE IN REVENUES
PROFIT MARGIN
RETAINED EARNINGS/NET INCOME
EFN $ AMOUNT: (EXCESS)

ADJ. WORKING CAP EXTERNAL FINANCING NEED (EFN):


(using ARs plus inventory & APs & other payables)
REVENUES
ACCOUNTS RECEIVABLE PLUS INVENTORY to REVENUES
ACCOUNTS PAYABLE to REVENUES
OTHER PAYABLES (in Current Liabilities) to REVENUES
CHANGE in REVENUES
PROFIT MARGIN to REVENUES
RETAINED EARNINGS/NET INCOME
EFN $ AMOUNT: (EXCESS)

Green = continue Amber = warning Red = danger


332

GROWTH
RATE in
DOLLARS

10

11

12

STANDARD
DEVIATION

PROBABILITY

LINKAGE TO
REVENUES

#19 MARKET VALUATION MULTIPLES


GMV P/E

GMV to EBITDA

GMV to DEBT FREE CASH FLOW

120.00
100.00

DISCOUNT RATE or WEIGHTED COST of CAPITAL


GROWTH RATE LONG TERM - NOMINAL GDP RATE
CAPITALIZATION RATE (CAP RATE) - inverse equals price multiple

16.14

41.05

80.00

$20,943,333
$5,981,000

$36,500,000
$5,981,000

60.00

$14,962,333

$30,519,000

170.63%

477.40%

$15,013,333

$31,050,600

27.07
14.56
38.25

16.81

14.04

13.26

112.27

17.36

38.81

21.52
10.94
66.67

2006

2007

2008

2009

2010

AVERAGE

$10,129,000
52.46%
34.31%

$12,455,000
55.62%
39.12%
$2,326,000
5.72%
55.12%
$310,196

$13,861,000
45.86%
31.20%
$1,406,000
6.32%
64.61%
$148,806

$14,600,000
56.47%
32.43%
$739,000
5.10%
40.86%
$162,276

$16,240,000

$13,457,000
51.05%
33.03%
$1,527,750
5.47%
55.03%
$210,180

4.51%

28.67

23.34

26.73

44.86%
28.08%
$1,640,000
5.71%
59.55%
$219,441

40.00

20.00
0.00

2007

2008

2009

2010

$146,601

$2,434

$25,156

$77,254

($146,601)

($2,434)

($25,156)

($77,254)

#20 WORKING CAPITAL NEED


WORKING CAPITAL NEED

Green = continue Amber = warning Red = danger


320
321
322
323
324
325
326
327
328
329
330
331

% of
AVERAGE
REVENUES

$1,231,000
(257,800)
36,400
(462,100)
$0
$547,500

295

301
302
303
304
305
306
307
308
309
310
311
312
313
314
315
316
317
318
319

% of
CURRENT
REVENUES

ANNUAL NET REVENUE CHANGE

2,500,000

2006

2007

2008

2009

2010

$10,129,000
42.08%
15.25%
19.05%

$12,455,000
48.58%
17.85%
21.28%
$2,326,000
5.72%
55.12%
$146,601

$13,861,000
35.45%
10.78%
20.42%
$1,406,000
6.32%
64.61%
$2,434

$14,600,000
37.92%
11.40%
21.03%
$739,000
5.10%
40.86%
$25,156

$16,240,000

4.51%

36.19%
9.33%
18.75%
$1,640,000
5.71%
59.55%
$77,254

AVERAGE

2,000,000

1,500,000
$13,457,000
40.04%
1,000,000
12.92%
20.11%
500,000
$1,527,750
5.47%
0
55.03%
$62,861
(500,000)

2007

2008

2009

2010

10

Financial data provided through ENGINEERING FIRM. The financial statements are NOT audited or assured by BUSINESS FERRET LLC.
1
2
3
4
5
6
7
8
9

1
333
334
335
336
337
338
339
340
341
342
343
344
345
346
347
348
349
350
351
352
353
354
355
356
357
358
359
360
361

CURRENT LINE OF CREDIT NEED:

2006

2007

2008

2009

$2,500,000

$767,000

$509,000

$892,000

$2,210,000

$816,000

$1,038,800

2,395,000
465,000
302,000
0
$302,000

3,435,000
785,000
(276,000)
0
($276,000)

2,854,000
24,000
868,000
0
$868,000

3,567,000
497,000
1,713,000
0
$1,713,000

3,810,000
765,000
51,000
0
$51,000

3,212,200
507,200
531,600
0
$531,600

(302,000)

276,000

(868,000)

(1,713,000)

(51,000)

NEEDED TOTAL CASH BALANCE in WORKING CAPITAL

$465,000

$785,000

$24,000

$497,000

$765,000

(465,000)

(785,000)

(24,000)

(497,000)

(765,000)

MAXIMUM POTENTIAL BORROWING CAPACITY 65/40/33 net fixed


TOTAL INTEREST BEARING LIABILITIES OUTSTANDING
BORROWING AVAILABILITY or (OVER-BORROWED)
INTEREST BEARING DEBT to EBITDA MULTIPLE

$2,949,490
810,000
2,139,490

$4,135,770
533,000
3,602,770

$3,428,070
653,000
2,775,070

$3,860,420
1,225,000
2,635,420

$4,098,570
1,421,000
2,677,570

$3,694,464
928,400
2,766,064

0.43

0.44

0.78

0.74

0.60

2007

2008

2009

2010

AVERAGE

WORKING CAPITAL / TOTAL ASSETS


(x 6.56)
ENDING RETAINED EARNINGS / TOTAL ASSETS
(x 3.26)
EARNINGS PRE - INTEREST EXP & INC TAX / TOTAL ASSETS
(x 6.72)
NET WORTH / TOTAL LIABILITIES
(x 1.05)
ALTMAN Z SCORE:

21.72%
1.42
49.27%
1.61
9.68%
0.65
97.60%
1.02

19.44%
1.28
43.21%
1.41
10.03%
0.67
95.43%
1.00
4.36

18.52%
1.21
46.73%
1.52
11.10%
0.75
120.59%
1.27
4.75

25.41%
1.67
39.35%
1.28
9.01%
0.61
131.74%
1.38
4.94

12

AVERAGE
AVERAGE

NEEDED LINE of CREDIT (LOC) (assuming no cash)


NEEDED LOC (including other payables)
CASH minus NEEDED ADJUSTED LOC
OUTSTANDING LOC BALANCE
EXCESS or (SHORTFALL) CASH BALANCE or LOC

2006

11

2010

CASH BALANCE

ALTMAN Z BANKRUPTCY SCORE:

10

% of
% of
GROWTH
STANDARD
LINKAGE TO
CURRENT #21
AVERAGE
RATE
in
WORKING
CAPITAL
CASH &PROBABILITY
LOC NEEDREVENUES
DEVIATION
REVENUES
REVENUES
DOLLARS
CASH BALANCE
WC CASH NEED
LOC NEED

18.47%
1.21
40.59%
1.32
9.31%
0.63
146.61%
1.54
4.70

$507,200

$2,000,000
$1,500,000
$1,000,000
$500,000
$0
($500,000)
($1,000,000)
($1,500,000)

($2,000,000)

2006

2007

2008

2009

2010

20.71%
1.36
43.83%
1.43
9.83%
0.66
118.40%
1.24
4.69

Green = continue Amber = warning Red = danger


362

11

Financial data provided through ENGINEERING FIRM. The financial statements are NOT audited or assured by BUSINESS FERRET LLC.
1
2
3
4
5
6
7
8
9

1
363
364
365
366
367
368
369
370
371
372
373
374
375
376

NET TRADE CYCLE or CASH CONVERSION CYCLE:


ANNUAL YEAR END - NON-AVERAGED
NUMBER OF DAYS TIED UP IN
ACCOUNTS RECEIVABLE TO REVENUES
CASH RELEASE or (USE) from ACCOUNTS RECEIVABLE
NUMBER OF DAYS TIED UP IN
INVENTORIES to REVENUES
CASH RELEASE or (USE) from INVENTORIES
LESS: NUMBER OF DAYS TIED UP IN
ACCOUNTS PAYABLE to REVENUES
CASH RELEASE or (USE) from ACCOUNTS PAYABLE

2006

2007

2008

2009

2010

AVERAGE

151

175
($810,284)

128
$1,820,076

137
($360,010)

130
$280,852

144
$232,658

0
#DIV/0!

0
$0

0
$0

0
$0

0
$0

0
$0

55

64
$323,210

39
($979,946)

41
$91,347

34
($337,027)

47
($225,604)

NET TRADE CYCLE DAYS:

97

111

89

95

97

% of
CURRENT
REVENUES

% of
AVERAGE
REVENUES

GROWTH
RATE in
DOLLARS

10

11

12

STANDARD
DEVIATION

PROBABILITY

LINKAGE TO
REVENUES

98

Green = continue Amber = warning Red = danger


377
378
379
380
381
382
383
384
385
386
387
388
389
390
391
392
393
394
395
396
397
398
399
400
401
402
403
404
405

CAPITAL CASH NEEDS FOR FULL NET TRADE CYCLE


DAILY OPERATIONAL EXPENSE CASH NEEDS
NET CASH RELEASE or USE from TRADE CYCLE
CASH GAIN or (LOSS) per Chg in NET TRADE DAYS
WEIGHTED AVERAGE COST OF CAPITAL:
(using all interest bearing debt)
OVERALL BORROW RATE AFTER TAX
RETURN ON EQUITY (ROE)
FINANCED DEBT to FINANCED DEBT plus EQUITY - percentage
EQUITY to LONG TERM DEBT plus EQUITY - percentage

$3,551,696
$32,100
($487,074)
($34,597)

2006

ACTUAL WEIGHTED COST OF CAPITAL:


ADJ. COST of CAP. with assumed ROE of 26.5% annually
MONTHLY DISCOUNT PERCENTAGE

ROE % / OPERATING EARNINGS GROWTH %


DUPONT FORMULA - ROI, ROE, and ECONOMIC VALUE ADDED (EVA):
(return on invested capital & return on equity)
REVENUES DIVIDED BY TOTAL ASSETS
NET OPERATING INCOME (NOI) AFTER TAX DIVIDED BY REVENUES
TOTAL ASSETS DIVIDED BY TOTAL EQUITY
NET INCOME AFTER TAX DIVIDED BY REVENUES
RETURN ON INVESTED CAPITAL ROI:
ADJUSTED RETURN ON EQUITY ROE:
RETURN ON EQUITY ROE:
ROI minus ADJUSTED WEIGHTED COST OF CAPITAL
CUMULATIVE EVA PREMIUM or (DEFICIT) WEALTH

2006

$3,136,501
$35,311
$840,129
$38,503

$3,584,917
$37,558
($268,663)
($40,556)

$3,967,432
($56,175)
($45,111)

$3,560,137
$34,990
$7,054

2007

2008

2009

2010

AVERAGE

0.00%
13.82%
9.36%
90.64%

0.00%
14.60%
9.81%
90.19%

0.00%
9.48%
13.50%
86.50%

0.00%
10.57%
13.95%
86.05%

0.00%
12.12%
11.65%
88.35%

12.53%
24.02%

13.16%
23.90%

8.20%
22.92%

9.10%
22.80%

10.75%
23.41%

2.00%

1.99%

1.91%

1.90%

1.95%

0.47

0.97

4.44

1.03

1.73

2007

2008

2009

2010

AVERAGE

117.89%
5.53%
204.79%
5.72%
6.52%
13.36%
13.82%

126.25%
5.72%
182.92%
6.32%
7.22%
13.20%
14.60%

105.71%
5.54%
175.90%
5.10%
5.86%
10.31%
9.48%

110.10%
5.50%
168.21%
5.71%
6.05%
10.18%
10.57%

114.99%
5.57%
182.96%
5.71%
6.41%
11.76%
12.12%

-6.00%

-5.95%

-2.34%

-3.05%

-4.33%

($634,409)

($1,287,229)

($1,610,085)

($2,059,465)

($1,397,797)

Green = continue Amber = warning Red = danger


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