CASE STUDY #2

Please follow these directions exactly:

1 Create a P&L and cash flow from scratch, following the directions below. Do not use templates.
When you create these, add tabs next to the Directions and Numbers
Remember there are 3 steps to this: reading the direction, PROCESSING WHAT THAT DIRECTION MEANS, then AP

2 "The Numbers" tab gives you the annual numbers for the company. Use only this information and do not add any
Feel free to use the numbers as a worksheet, if you desire, but you are not required to fill it out for our purposes.
The COGS are specified on the numbers sheet, so use those items for the COGS on the P&L.
Make sure to understand which items on the numbers are balance sheet items. Anything listed as "expense" in th
(HINT: My total expenses are $535,733, so you will know you are right if they match.)
For all numbers, make them whole. For all percentages, make them to 2 decimal places.
Within each section on the P&L and cash flow, please sort each section alphabetically
Pay special attention to any direction with a >, as these are often-made mistakes.

3 Create a separate tab, name it P&L.

Create a P&L for the overall company and each division separately. So there will be five P&L's on the same page, w
first column being Company, then Commercial, Residential, Design/Build, and Snow Removal, and the percentag
In a separate row under divisions, list "% to Total Sales."
>To clarify, the format will be as follows; divisions across the top, line items down the lef
The row of "% to Total Sales" will list ONLY the % of each division to the overall company
You will replace the letters (W-Z) with the % of that division to Total sales.
The column of % in each division will reflect the % of each item as it relates to the Net Re

Copy the header below to the top of your P&L:

Company % Commercial % Residential % Design/Build

% to Total Sales W% X% Y%

Apply all returns to Residential.

Equipment Rental and Contract Labor should be allocated Snow Removal.
>Material discounts should be allocated to all lines and should be allocated as percent of
>For expenses on Company, list out each operating expense category individually, but on
as a percentage of total sales (Net). To clarify, each divison will ONLY have a dollar amo
List every item as a percentage of the division's revenue, unless otherwise specified.

Create a cash flow tab, and create a 6-week cash flow for this business. Start your cash flow on 1/1, which is a Mo
There are no cash sales currently, all are sold on 30-day terms. All AP is on 30-day terms.
There should be a starting balance, cash in, cash out, and ending balance. You must improve their cash situation e
Advertising, Bank Charges, Business Licenses, Equipment Expense, Computer Software, and Rent are all paid on th
Contract Labor, Equipment Rental, Freight In, and all Insurances are paid on the 8th of the month.
 Labor, Manager Salary, Payroll, and Sales Commissions are paid bi-weekly starting on the first of the month.
Maintenance, Office Supplies, Payroll Taxes, and Postage are paid on the 15th of the month.
Shipping/Delivery, Shop Supplies, Small Hand Tools, Telephone, Utilities and Vehicle expense are all paid on the 25
Use the breakdowns of the AR and AP (list each category)

5 Format both the P&L and Cash Flow in Excel to be easy to read and appropriate to hand to a client (worth $495/h
Format each to print on one page, using portrait and/or landscape, as applicable.

My Notes:

1 Please do a Balance Sheet, as well.

2 When do the A/R and A/P do it as you would do in a real situation such as
pay out a portion of payables per period such as weekly as well as
receiving a portion of receivables per period. For example, you would pay a
portion or all of over 90 days payable first.
The assessor critique that as one of my errors in the last statement. He also
said freight expenses should be in goods for sale. Its part of sales cost.
3 One of the objective is to show posititive cash flows. (i.e. ensure
the business has positive cash flows. We need to help the business to be in a
positive cash flow situation.
4 List assumptions.
 use templates.

THAT DIRECTION MEANS, then APPLYING that direction

s information and do not add any categories.

ired to fill it out for our purposes. IF IT HELPS YOU, FILL IT OUT.

Anything listed as "expense" in the title will go under expenses in the P&L.
ght if they match.)

be five P&L's on the same page, with the

Snow Removal, and the percentage to revenue in that division.

op, line items down the left column.

ion to the overall company.
Total sales.
m as it relates to the Net Revenue of that division.

% Snow Removal %
Z%

be allocated as percent of materials.

ategory individually, but on each product line, ONLY list the Total Operating Expense
will ONLY have a dollar amount (as a formula) and percentage listed on the Total Operating Expense line.

ur cash flow on 1/1, which is a Monday.

ust improve their cash situation each week.

ftware, and Rent are all paid on the 1st of the month.
8th of the month.
ng on the first of the month.
f the month.
hicle expense are all paid on the 25th of each month.

to hand to a client (worth $495/hour)

perating Expense line.