BUTLER LUMBER COMPANY

Income Statement
Operating Statements for Years Ending December 31, 1988-1990, and
for First Quarter 1991 (thousands of dollars)
1st Qtr
1988 1989 1990 1991

Net sales $1,697 $2,013 $2,694 $718

Cost of goods sold:
Beginning inventory $183 $239 $326 $418
Purchases $1,278 $1,524 $2,042 $660
$1,461 $1,763 $2,368 $1,078
Ending inventory $239 $326 $418 $556
Total cost of goods sold $1,222 $1,437 $1,950 $522
Gross Profit $475 $576 $744 $196
Operating expenses $425 $515 $658 $175
Interest expense $13 $20 $33 $10
Net income before income taxes $37 $41 $53 $11
Provision for income taxes $6 $7 $9 $2
Net income $31 $34 $44 $9
BUTLER LUMBER COMPANY
Balnce Sheet
Balance Sheets at December 31, 1988-1990, and March 31, 1991 (thousands of dollars)
1st Qrtr
1988 1989 1990 1991

Cash $58 $49 $41 $31

Accounts receivable, net $171 $222 $317 $345
Inventory $239 $325 $418 $556
Current assets $468 $596 $776 $932
Property, net $126 $140 $157 $162
Total assets $594 $736 $933 $1,094

Notes payable, bank $0 $146 $233 $247

Notes payable, Mr. Stark $105 $0 $0 $0
Notes payable, trade $0 $0 $0 $157
Accounts payable $124 $192 $256 $243
Accrued expenses $24 $30 $39 $36
Long-term debt, current portion $7 $7 $7 $7
Current liabilities $260 $375 $535 $690
Long-term debt $64 $57 $50 $47
Total liabilities $324 $432 $585 $737
Net worth $270 $304 $348 $357
Total liabilities & net worth $594 $736 $933 $1,094
COMMON SIZE STATEMENTS

Percentage of Sales
1988 1989 1990 Average

Purchases 75.3% 75.7% 75.8% 75.6%

Cost of goods sold 72.0% 71.4% 72.4% 71.9%
Operating expenses 25.0% 25.6% 24.4% 25.0%
Cash 3.4% 2.4% 1.5% 2.5%
Accounts receivable 10.1% 11.0% 11.8% 11.0%
Inventory 14.1% 16.1% 15.5% 15.2%
Fixed assets (net) 7.4% 7.0% 5.8% 6.7%
Total assets 35.0% 36.6% 34.6% 35.4%
Accrued Expenses 1.4% 1.5% 1.4% 1.5%

Percentage of Total Assets

1988 1989 1990 Average

Current liabilities 43.8% 51.0% 57.3% 50.7%

Long-term liabilities 10.8% 7.7% 5.4% 8.0%
Equity 45.5% 41.3% 37.3% 41.4%
PROJECTIONS FOR YEAR 1991

Projected income statement for 1991 (thousands of dollars)

1991

Net sales $ 3,600

Cost of goods sold:
Beginning inventory $418
Purchases $2,722
$3,140
Ending inventory $550
Total cost of goods sold $2,589
Gross Profit $1,008
Operating expenses $901
Operating Profit $107
Purchase Discounts* $54
Interest expense** $40
Net income before income taxes $122
Provision for income taxes $30
Net income $92

Projected balance sheet for December 31, 1991 (thousands of dollars)

1991
Assets:
Cash $88
Accounts recievable, net (12% of sales) $394
Inventory $550
Current Assets $1,033
Property, net $162
Total Assets $1,195
`
Liabilities:
Accounts payable $76
Accrued expenses $52
Long-term debt, current portion $7
Provision for taxation $30
Bank note payable* $548
Current Liabilities $712
Long-term debt $43
Total Liabilities $755
Net worth $440
Total Liabilities plus net worth $1,195
* Bank note payable = (Total assets- Total liabilities except note payable - Net Worth) $547.75
 Assumptions
Value Explanation

$ 3,600 given in case

From Income Statement

75.61% historical % of sales

computed value (beg inv + purch - end inv)

71.93% historical % of sales

25.02% historical % of sales

2% assuming that payments are made within 10 days of purchase

based on the quaterly interest expense ($10*4)

as per given tax slab

2.46% average percent of sales

11% average percent of sales
computed value from above

assuming no other property is purchased after Q1

10 days of purchases
1.45% average % of sales
constant amortization

Balancing figure

repayment of $7000 p.a.

last year's balance plus current net income

WORKING CAPITAL ASSESSMENT

1988 1989 1990 1991(Projected)

Curent Assets 468.00 596.00 776.00 1033.39
Current Liabilities 260.00 375.00 535.00 712.25
Other Current liabilities 253.00 222.00 295.00 157.50
Working Capital Gap (=CA-OCL) 215.00 374.00 481.00 875.89

Current ratio (=CA/CL) 1.80 1.59 1.45 1.45

METHOD I
Margin (= 0.25 of WCG) 53.75 93.50 120.25 218.97
MPBF (= 0.75 of WCG) 161.25 280.50 360.75 656.92

METHOD II
Margin (= 0.25 of Current Assets) 117.00 149.00 194.00 258.35
MPBF [(0.75 of CA)- OCL] 98.00 225.00 287.00 617.55