Practice Case Study A Strictly Confidential

Table of Contents Model Checks

Outputs Model Exceeding Operational Capacity? No

Inputs Unused Tax Losses Remaining? Yes
Model Balanced Sheet Unbalanced? No

Model Circularity

Model Circularity 1

This model now has the circularity turned on. Please confirm the Excel settings below
PC File - Options - Formulas - Check the box on the top-right labeled 'Enable iterative calculation'.
Mac Excel - Preferences - Calculation - Check the box near the bottom labeled 'Use iterative calculation'.

© 2015 to 2022 CFI Education Inc.

This Excel model is for educational purposes only and should not be used for any other reason. All content is Copyright material of CFI Education Inc.
All rights reserved. The contents of this publication, including but not limited to all written material, content layout, images, formulas, and code, are protected
under international copyright and trademark laws. No part of this publication may be modified, manipulated, reproduced, distributed, or transmitted in any
form by any means, including photocopying, recording, or other electronic or mechanical methods, without prior written permission of the publisher,
except in the case of certain noncommercial uses permitted by copyright law.

https://corporatefinanceinstitute.com/
Dashboard: Charts & Graphs

All figures in USD thousands unless stated 2020A 2021A 2022A 2023F 2024F 2025F 2026F 2027F

Driver Switch

INCOME STATEMENT

Revenue 30,628 34,847 47,365 – – – – –

EBITDA – – – – – – – –
EBITDA Margin – – – #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

Net Income – – – – – – – –
Net Income Margin – – – #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

CASH FLOW STATEMENT

Operating – – – – – – – –
Investing – – – – – – – –
Financing – – – – – – – –
Change in Cash – – – – – – – –

INCOME STATEMENT CASH FLOW STATEMENT

Revenue EBITDA Margin Net Income Margin 1 Investing Financing Operating Change in Cash
50,000 100.0%

45,000 90.0%

40,000 80.0%

35,000 70.0%

30,000 60.0%

25,000 50.0% 1

20,000 40.0%

15,000 30.0%

10,000 20.0%

5,000 10.0%

– – –
2020A 2021A 2022A 2023A 2024A 2025A 2026A 2027A 2020A 2021A 2022A 2023A 2024A 2025A 2026A 2027A
Drivers

All figures in USD thousands unless stated 2023F 2024F 2025F 2026F 2027F

Driver Switch 2

Sales Volume Growth

Best Case 9.0% 8.0% 7.0% 6.0% 4.0%

Base Case 7.0% 6.0% 5.0% 4.0% 3.0%
Worst Case 5.0% 4.0% 3.0% 2.0% 1.0%

Pricing Increases

Best Case 13.0% 10.0% 9.0% 6.0% 4.0%

Base Case 12.0% 9.0% 8.0% 4.0% 2.0%
Worst Case 8.0% 7.0% 5.5% 2.5% –

Capital Expenditure

Best Case 6,500 6,000 5,500 5,500 4,000

Base Case 8,500 8,000 7,500 7,500 7,000
Worst Case 9,500 9,000 8,000 8,000 7,500
Other Inputs

All figures in USD thousands unless stated 2023F 2024F 2025F 2026F 2027F

Working Capital
Accounts Receivable (Days) 40 40 40 40 40
Inventory (Days) 25 25 25 25 25
Accounts Payable (Days) 34 34 34 34 34

Other Annual Inputs

Inflation Rate 5.0% 5.0% 3.0% 2.0% 2.0%
Term Debt Increase / (Decrease) (4,000) (4,000) (4,000) (4,000) (4,000)
Common Equity Increase / (Decrease) – (5,000) (5,000) – –

Dates Taxes
First Year of Forecast (YYYY) 2023 Tax Rate 31%
Days in Period 365 First Year Tax Depreciation 50%
Blended Tax Depreciation Rate 15.0%
Tax Basis for Assets (End of 2022) 92,164
Other Single Inputs Tax Losses (End of 2022) 69,512
Plant Capacity (Units/Day) 2,000
Dividend Payout Ratio 35%

Interest Rates Depreciation

Cash Balances 1.5% First Year Accounting Depreciation 50%
Revolving Credit Line 4.0% Useful Life: Existing Assets (Years) 10.00
Long Term Debt 6.0% Useful Life: New Assets (Years) 15.00
Income Statement

All figures in USD thousands unless stated 2020A 2021A 2022A 2023F 2024F 2025F 2026F 2027F
Model Running: Base Case Drivers

Inflation 2.5% 3.5% 4.5% 5.0% 5.0% 3.0% 2.0% 2.0%

Revenue 30,628 34,847 47,365

COGS (31,457) (32,866) (35,566)
Gross Profit

SG&A (1,284) (1,329) (1,389) (1,458) (1,531) (1,577) (1,609) (1,641)

Other (750) (776) (811) (852) (894) (921) (940) (958)
EBITDA

Depreciation (9,234) (9,861) (10,245)

EBIT

Interest Expense (2,400) (2,160) (1,920)

Interest Income 171 33 14
EBT

Current Tax – – –
Deferred Tax – – –
Total Tax

Net Income
Cash Flow Statement

All figures in USD thousands unless stated 2020A 2021A 2022A 2023F 2024F 2025F 2026F 2027F
Model Running: Base Case Drivers

CASH FROM OPERATIONS

Net Income
Deferred Taxes
Depreciation
Cash From Accounts Receivable (600) (525) 212
Cash From Inventory (400) (131) (86)
Cash From Accounts Payable (260) 181 114
Subtotal

CASH FROM INVESTING

Capital Expenditure (7,125) (7,265) (7,482)
Subtotal

CASH FROM FINANCING

Change in Long-Term Debt (4,000) (4,000) (4,000)
Change in Revolving Credit Line - - 2,000
Change in Common Equity - 13,000 -
Dividends - - -
Subtotal

CASH BALANCE
Beginning of the Year 20,165
Increase / (Decrease)
End of the Year
Balance Sheet

All figures in USD thousands unless stated 2020A 2021A 2022A 2023F 2024F 2025F 2026F 2027F
Model Running: Base Case Drivers

ASSETS

Cash
Accounts Receivable 5,008 5,533 5,321
Inventories 1,892 2,023 2,109
Total Current Assets

Property Plant & Equipment 118,411 115,815 113,052

Total Assets

LIABILITIES

Accounts Payable 3,024 3,205 3,319

Revolving Credit Line – – 2,000
Total Current Liabilities

Deferred Taxes 6,290 6,290 6,290

Long-Term Debt 40,000 36,000 32,000
Total Liabilities

EQUITY

Common Equity 55,138 68,138 68,138

Retained Earnings 23,548 11,436 8,885
Total Shareholders' Equity

Total Liabilities & Equity

Check – – – – – – – –
Revenue Schedule

All figures in USD thousands unless stated 2020A 2021A 2022A 2023F 2024F 2025F 2026F 2027F
Model Running: Base Case Drivers

OPERATIONS

Sales Volume Growth 5.3% 19.2% – – – – –

Sales Volume (Units/Day) 1,234 1,300 1,550 1,550 1,550 1,550 1,550 1,550
Plant Capacity (Units/Day) 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000
Operational Efficiency 61.7% 65.0% 77.5% 77.5% 77.5% 77.5% 77.5% 77.5%

VOLUME

Days in Period 365 365 365 365 365 365 365 365
Sales Volume (Units/Day) 1,234 1,300 1,550 1,550 1,550 1,550 1,550 1,550
Sales Volume (Units) 450,410 474,500 565,750 565,750 565,750 565,750 565,750 565,750

PRICING

Pricing Increases 8.0% 14.0% – – – – –

Unit Price (USD/Unit) 68.00 73.44 83.72 83.72 83.72 83.72 83.72 83.72

REVENUE

Sales Volume (Units) 450,410 474,500 565,750 565,750 565,750 565,750 565,750 565,750
Sales Price (USD/Unit) 68.00 73.44 83.72 83.72 83.72 83.72 83.72 83.72
Revenue 30,628 34,847 47,365 47,365 47,365 47,365 47,365 47,365

Operational Capacity Exceeded? No No No No No No No No

Cost Schedule

All figures in USD thousands unless stated 2020A 2021A 2022A 2023F 2024F 2025F 2026F 2027F
Model Running: Base Case Drivers

Sales Volume 450,410 474,500 565,750 565,750 565,750 565,750 565,750 565,750
Inflation 2.5% 3.5% 4.5% 5.0% 5.0% 3.0% 2.0% 2.0%

VARIABLE COSTS

Materials (USD/Unit) 11.12 11.51 12.03 12.63 13.26 13.66 13.93 14.21
Packaging (USD/Unit) 1.25 1.29 1.35 1.42 1.49 1.54 1.57 1.60
Subtotal 12.37 12.80 13.38 14.05 14.75 15.19 15.50 15.81

Materials 5,009 5,461 6,804 7,145 7,502 7,727 7,881 8,039

Packaging 563 614 765 803 843 869 886 904
Subtotal 5,572 6,075 7,569 7,948 8,345 8,595 8,767 8,943

FIXED COSTS

Labor (USD/Unit) 38.15 37.48 32.85 34.49 36.22 37.30 38.05 38.81
Utilities (USD/Unit) 19.32 18.98 16.64 17.47 18.34 18.89 19.27 19.65
Subtotal 57.47 56.46 49.49 51.96 54.56 56.19 57.32 58.47

Labor 17,183 17,784 18,585 19,514 20,490 21,104 21,526 21,957

Utilities 8,702 9,007 9,412 9,882 10,377 10,688 10,902 11,120
Subtotal 25,885 26,791 27,997 29,396 30,866 31,792 32,428 33,077

SUMMARY

Variable Costs (USD/Unit) 12.37 12.80 13.38 14.05 14.75 15.19 15.50 15.81
Fixed Costs (USD/Unit) 57.47 56.46 49.49 51.96 54.56 56.19 57.32 58.47
Total Costs (USD/Unit) 69.84 69.26 62.86 66.01 69.31 71.39 72.82 74.27

Variable Costs 5,572 6,075 7,569 7,948 8,345 8,595 8,767 8,943
Fixed Costs 25,885 26,791 27,997 29,396 30,866 31,792 32,428 33,077
Total Costs 31,457 32,866 35,566 37,344 39,211 40,388 41,195 42,019
Working Capital Schedule

All figures in USD thousands unless stated 2020A 2021A 2022A 2023F 2024F 2025F 2026F 2027F
Model Running: Base Case Drivers

Days in Period 365 365 365 365 365 365 365 365
Revenue 30,628 34,847 47,365 – – – – –
COGS 31,457 32,866 35,566 – – – – –

AMOUNTS PER DAY

Accounts Receivable (Days) 60 58 41 40 40 40 40 40
Inventory (Days) 22 22 22 25 25 25 25 25
Accounts Payable (Days) 35 36 34 34 34 34 34 34

TOTAL AMOUNTS
Accounts Receivable 5,008 5,533 5,321 – – – – –
Inventory 1,892 2,023 2,109 – – – – –
Accounts Payable 3,024 3,205 3,319 – – – – –

CASH CHANGES
Accounts Receivable (525) 212 5,321 – – – –
Inventory (131) (86) 2,109 – – – –
Accounts Payable 181 114 (3,319) – – – –
Cash from Working Capital Items (475) 240 4,111 – – – –
Depreciation Schedule

All figures in USD thousands unless stated 2022A 2023F 2024F 2025F 2026F 2027F
Model Running: Base Case Drivers

Capital Expenditure – – – – –

EXISTING ASSETS 1 Percent of Full Year

Useful Life (Years) 10.00 Yr 1 Yr 2 Yr 3 Yr 4 Yr 5
PP&E (End of 2022) 113,052 100% 100% 100% 100% 100%

Percent of Full Year

NEW ASSETS 1
Year Life 2023F 2024F 2025F 2026F 2027F
Useful Life (Years) 15.00 2023F 15.00 50% 100% 100% 100% 100%
First Year Amount 50% 2024F 15.00 – 50% 100% 100% 100%
2025F 15.00 – – 50% 100% 100%
2026F 15.00 – – – 50% 100%
2027F 15.00 – – – – 50%

Amounts for Depreciation

Year Capex Per Yr 2023F 2024F 2025F 2026F 2027F
2023F - - – – – – –
2024F - - – – – – –
2025F - - – – – – –
2026F - - – – – – –
2027F - - – – – – –

TOTAL ASSET DEPRECIATION 2

Existing Assets 11,305 11,305 11,305 11,305 11,305
New Assets – – – – –
Total Depreciation 11,305 11,305 11,305 11,305 11,305

All PP&E and capital expenditure is assumed depreciable (i.e. no land balance). ⁽¹⁾
This schedule calculates depreciation on a straight-line basis. ⁽²⁾
Asset Schedule

All figures in USD thousands unless stated 2022A 2023F 2024F 2025F 2026F 2027F
Model Running: Base Case Drivers

Capital Expenditure – – – – –

First Year Tax Depreciation 50%

Blended Tax Depreciation Rate 15.0%

PROPERTY PLANT & EQUIPMENT 1

Beginning 113,052 101,747 90,442 79,137 67,831
Capital Expenditure – – – – –
Accounting Depreciation (11,305) (11,305) (11,305) (11,305) (11,305)
Ending 113,052 101,747 90,442 79,137 67,831 56,526

TAX BASIS 1
Beginning 92,164 78,339 66,588 56,600 48,110
Capital Expenditure – – – – –
Tax Depreciation (13,825) (11,751) (9,988) (8,490) (7,217)
Ending 92,164 78,339 66,588 56,600 48,110 40,894

Model assumes no dispositions that would impact the PP&E or the Tax Basis. ⁽¹⁾
Income Tax Schedule

All figures in USD thousands unless stated 2022A 2023F 2024F 2025F 2026F 2027F
Model Running: Base Case Drivers

Earnings Before Tax (EBT) – – – – –

Profitable Before Taxes? No No Yes Yes Yes

Tax Rate 31%

Unused Tax Losses Remaining? Yes

ADJUSTMENT FOR DEPRECIATION

EBT – – – – –
Add: Accounting Depreciation 11,305 11,305 11,305 11,305 11,305
Less: Tax Depreciation (13,825) (11,751) (9,988) (8,490) (7,217)
EBT After Adjustment (2,519) (446) 1,317 2,815 4,089

ADJUSTMENT FOR TAX LOSSES 1

EBT After Adjustment (2,519) (446) 1,317 2,815 4,089
Less: Use of Tax Losses 2 – – (1,317) (2,815) (4,089)
Taxable Income – – – – –

TAX LOSSES
Beginning 69,512 69,512 69,512 68,195 65,380
Add: New Losses – – – – –
Less: Use of Tax Losses – – (1,317) (2,815) (4,089)
Ending 69,512 69,512 69,512 68,195 65,380 61,291

TAXES
Current Taxes – – – – –
Deferred Taxes – – – – –
Total Taxes – – – – –

This schedule assumes that tax losses can be carried forward indefinitely into the future. ⁽¹⁾
This schedule assumes losses do not carry back to previous periods to reduce taxable income. ⁽²⁾
Debt Schedule: Part 1

All figures in USD thousands unless stated 2022A 2023F 2024F 2025F 2026F 2027F
Model Running: Base Case Drivers

CASH

Beginning Balance
Increase / (Decrease)
Ending Balance

Interest Rate Circularity 1.5% 1.5% 1.5% 1.5% 1.5%

Interest Income On

LONG TERM DEBT

Beginning Balance 32,000 28,000 24,000 20,000 16,000

Increase / (Decrease) (4,000) (4,000) (4,000) (4,000) (4,000)
Ending Balance 32,000 28,000 24,000 20,000 16,000 12,000

Interest Rate 6.0% 6.0% 6.0% 6.0% 6.0%

Interest Expense 1,800 1,560 1,320 1,080 840
Debt Schedule: Part 2

All figures in USD thousands unless stated 2022A 2023F 2024F 2025F 2026F 2027F
Model Running: Base Case Drivers

AVAILABLE CASH

Beginning Cash Balance

Cash from Operations
Cash from Investing
Change in Long-Term Debt
Change in Common Equity
Dividends
Cash Available for Revolving Credit Line

REVOLVING CREDIT LINE

Beginning Balance
Increase / (Decrease)
Ending Balance

Interest Rate Circularity 4.0% 4.0% 4.0% 4.0% 4.0%

Interest Expense On

Interest Expense
Less: Interest Income
Net Interest Expense
Equity Schedule

All figures in USD thousands unless stated 2022A 2023F 2024F 2025F 2026F 2027F
Model Running: Base Case Drivers

COMMON EQUITY

Beginning Balance 68,138 68,138 63,138 58,138 58,138

Increase / (Decrease) – (5,000) (5,000) – –
Ending Balance 68,138 68,138 63,138 58,138 58,138 58,138

Net Income
Payout Ratio 35.0% 35.0% 35.0% 35.0% 35.0%
Dividend

RETAINED EARNINGS

Beginning Balance 8,885 8,885 8,885 8,885 8,885

Net Income – – – – –
Dividends – – – – –
Ending Balance 8,885 8,885 8,885 8,885 8,885 8,885