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3 Financial Statements - Interview Question Model

($ in Millions, Except Per Share Amounts and Share Counts in Thousands)


Assumptions

Interview Questions

Tax Rate:
Interest Rate On Debt:
Current Share Price:
Par Value of Stock:
Initial Cash Balance:

40%
10%
$10.00
$1.00
$100

Units for Shares:


Units for Financials:

1,000
1,000,000

Income Statement

Revenue Changes By
Cost of Goods Sold Changes By
SG&A Changes By
Depreciation Changes By
Accounts Receivable Changes By
Inventory Changes By
Accounts Payable Changes By..
Accrued Expenses Changes By
Deferred Revenue Changes By
CapEx Changes By

$100

Balance Sheet

Old

New

Old

New

Assets:
Revenue:
Cost of Goods Sold:
Gross Profit:
Operating Expenses:
Research & Development:
Selling, General & Admin.:
Total Operating Expenses:
Depreciation:
Stock-Based Compensation:

$1,000
$100
$900

$1,000
$100
$900

$100
$100
$200

$100
$100
$200

$100
$100

$100
$100

Current Assets:
Cash & Cash-Equivalents:
Accounts Receivable:
Inventory:
Total Current Assets:

$550
$100
$200
$850

$550
$100
$300
$950

Long-Term Assets:
Property & Equip. (PP&E):
Long-Term Investments:
Goodwill:

$200
$100
$100

$200
$100
$100

Total Assets:
Operating Income:
Interest Income / (Expense):
Goodwill Impairment:
PP&E Write-Down:
Debt Write-Down:
Pre-Tax Income:
Income Tax Provision:

$500
$0
$0
$0
$0
$500
$200

$500
$0
$0
$0
$0
$500
$200

Net Income:

$300

$300

Earnings Per Share:


Shares Outstanding:

$3.00
100,000

$3.00
100,000

$1,250

$1,350

Liabilities & Shareholders' Equity:


Current Liabilities:
Revolver:
$50
Accounts Payable:
$100
Accrued Expenses:
$100
Total Current Liabilities:
$250

$50
$100
$100
$250

Long-Term Liabilities:
Deferred Revenue:
Long-Term Debt:
Deferred Tax Liabilities:
Dividends Declared:
Total Liabilities:

$200
$0
$100
$0
$550

$200
$100
$100
$0
$650

Shareholders' Equity:
Common Stock:
Additional Paid-In Capital:
Treasury Stock:
Retained Earnings:
Accum. Other Comp. Income:
Total Shareholders' Equity:

$100
$100
$0
$400
$100
$700

$100
$100
$0
$400
$100
$700

$1,250

$1,350

Total Liabilities & SE:

Goodwill Impairment Changes By


PP&E Write-Down Changes By
Debt Write-Down Changes By
Deferred Income Taxes Changes By
Long-Term Investments Changes By
Long-Term Debt Changes By
Interest Income Changes By
Dividends Declared Changes By
Dividends Issued Changes By
Equity Bailout Changes By
Re-Purchase Shares Changes By
Issue New Shares Changes By

$100

Cash Flow Statement

Old
Operating Activities:
Net Income:
$300
Depreciation:
$100
Stock-Based Compensation:
$100
Goodwill Impairment:
$0
PP&E Write-Down:
$0
Debt Write-Down:
$0
Deferred Income Taxes:
$0
Changes in Operating Assets & Liabilities:
Accounts Receivable:
$0

New
$300
$100
$100
$0
$0
$0
$0

$0

Inventory:
Accounts Payable:
Accrued Expenses:
Deferred Revenue:
Cash Flow from Operations:

$0
$0
$0
$0
$500

($100)
$0
$0
$0
$400

Investing Activities:
LT Investments:
Capital Expenditures:
Cash Flow from Investing:

$0
($50)
($50)

$0
($50)
($50)

Financing Activities:
Dividends Issued:
$0
Long-Term Debt:
$0
Equity Bailout:
$0
Re-Purchase Shares:
$0
Issue New Shares:
$0
Cash Flow from Financing:
$0

$0
$100
$0
$0
$0
$100

Increase / Decrease in Cash:


Cash & Cash Equivalents:

$450
$550

$450
$550