Homework Assignment 1: Tire City Pro Forma for 1997

Homework Assignment 1: Tire City Pro Forma for 1997
Due: Tuesday, January 18, 2005

Assignment:
First, complete the pro forma forecast for Tire City for 1997. In other w
in all the yellow shaded cells on the worksheet tabbed “Pro Forma”. For all for
items (anything that is not listed as an assumption) you must use a formula, not
number.
Second, calculate Tire City’s key performance ratios for 1997. That is,
the yellow shaded cells on the worksheet tabbed “Performance Ratios”. For all
ratios, you must use a formula, not a number.
Third, print out your work. Print the two worksheets with the numerica
on them, and then print the two worksheets in “formula reveal” (or audit) mode
reveal the formulas, press control accent (the accent key is the one above the ta
the left of the keyboard). You must print out both numerical results and formul
full credit.
Have fun and good luck.

For all these ot a number. fill in all orksheet tabbed “Performance Ratios”. To l accent (the accent key is the one above the tab key on ust print out both numerical results and formulas to get . not a ty’s key performance ratios for 1997. That is. For all forecast as an assumption) you must use a formula.Homework Assignment 1: Tire City Pro Forma for 1997 Tire City Pro Forma for 1997 rma forecast for Tire City for 1997. k. fill the worksheet tabbed “Pro Forma”. Print the two worksheets with the numerical results worksheets in “formula reveal” (or audit) mode. In other words.

325 1.545 1.822 $ $ $ $ $ $ $ $ $ 125 1.930 4.728 2.882 875 1.190 $ 240 $ $ $ $ $ $ $ $ 508 2.268 6.190 6.893 $ 7.430 Gross Profit $ 6.326 Income taxes $ 546 Net income $ 780 Dividends $ 155 BALANCE SHEET Assets Cash balances Accounts receivable Inventories Total current assets Gross plant & equipment Accumulated depreciation Net plant & equipment Total assets Liabilities and equity Current maturities Accounts payable Accrued expenses Total current liabilities Long-term debt Common stock Retained earnings Total shareholders' equity Total liabilities and equity 3 1994 1995 $ 20.822 $ $ $ $ $ $ $ $ 706 3.580 $ $ $ $ $ $ $ $ $ 125 1.335 1.230 Cost of sales $ 9.135 2.015 8.145 2. Inc.135 3. and administrative expenses $ 5. For years ending 12/31 1993 INCOME STATEMENT Net sales $ 16.095 1.352 $ 180 $ 106 $ 1.000 1.457 $ 6.683 3.065 7.355 $ 11.432 2.440 1.542 3.612 $ 9.435 8.135 2.218 750 1. general.800 Selling.Exhibit 1 Financial Statements for Tire City.232 1.838 5.280 7.548 4.897 6.115 $ 925 $ 1.652 2.505 $ 13.898 $ 8.819 $ 822 $ 997 $ 200 $ 23.042 1.133 3.880 5.163 1.795 1.471 $ 213 $ 94 $ 2.630 4.653 3.983 $ $ $ $ $ $ $ $ $ 125 1.195 Depreciation $ 160 Net interest expense $ 119 Pre-tax income $ 1.983 .515 2.312 1.580 $ $ $ $ $ $ $ $ 609 3.

17% 43.54% 10.13% 2.42% 7.5% Payables/Sales Accrued exp/Sales 3.2% 31.04% 9.18% 45.0% Cash/Sales Receivables/Sales Inventories/Sales 3.87% 20.06% 20.04% 6.74% Dividends/Net income 19.99% 3.32% 6.21% 15.10% 58.45% 57.78% 58.03% 9.51% 7.4% 20.68% 15.7% Income tax/Pretax income 41.0% .00% 15.4% 7.91% 32.03% 6.01% 31.5% 9.21% 31.13% 7.19% 43.Tire City: Historical Ratios 1993 Cost of sales/Sales SG&A/Sales 1994 1995 Average 58.05% 6.0% 15.

435 8.803 8.795 1.542 3.365 1.230 $ 9.695 Source given in case historical average historical average given in case given in case historical average historical average Cash to sales ratio Receivables to sales ratio Inventory assumption Gross CAPEX Current maturity LTD Payables to sales ratio Accruals to sales ratio Additions to common stock Pro Forma 1996 $ 1996 20% 58.0% historical average historical average 96 given in case.133 3.822 $ $ $ $ $ $ $ $ 1.7% 213 10.580 $ $ $ $ $ $ $ $ 1.0% 43.4% 20.848 6.683 3.430 $ 6.190 $ 240 $ $ $ $ $ $ $ $ $ $ 28.163 1. Inc.326 $ 546 $ 780 $ 155 $ 20.545 1.822 $ $ $ $ $ $ $ $ 706 3.930 4.548 4.163 1.190 6.065 7.986 4.4% 7.983 $ 10.325 1.403 11.104 1.983 $ $ $ $ $ $ $ $ $ $ 125 374 1.268 6.625 6.0% 15.135 2.135 2.070 $ 6.442 289 $ $ $ $ $ $ $ $ 508 2.000 125 6.000 1.222 11.545 1.277 625 1.352 $ 180 $ 106 $ 1.941 4.432 2. and administrative expenses Depreciation Net interest expense Pre-tax income Income taxes Net income Dividends BALANCE SHEET Assets Cash balances Accounts receivable Inventories Total current assets Gross plant & equipment Accumulated depreciation Net plant & equipment Total assets Liabilities Current maturities Bank Debt (Plug) Accounts payable Accrued expenses Total current liabilities Long-term debt Common stock Retained earnings Total shareholders' equity Total liabilities and shareholder's equity Memo: Total liabs and equity less Plug debt Pro forma assumptions Sales growth Cost of sales/Sales SG&A/Sales Depreciation Interest rate (blended) Income tax rate Dividend payout rate 1993 Historical 1994 1995 $ 16.5% 1.652 2.898 $ 8.983 $ $ $ $ $ $ $ $ 858 4.893 $ 7.792 1.195 $ 160 $ 119 $ 1.515 2.135 3.070 $ 125 $ 125 $ 125 $ $ $ $ $ $ $ $ 1.312 1.232 1.Historical and Pro Forma Financial Statements for Tire City. general.168 11. For years ending 12/31 INCOME STATEMENT Net sales Cost of sales Gross Profit Selling.580 $ $ $ $ $ $ $ $ 609 3.932 213 112 2.471 $ 213 $ 94 $ 2.819 $ 822 $ 997 $ 200 $ 23.135 5. 97 per historical average $ given in case $ historical amortization $ historical average historical average given in case $ 3 3.653 3.280 7.880 5.897 6.206 16.838 5.015 8.822 $ 8.800 $ 5.625 2.440 1.335 1.630 4.355 $ 11.042 1.2% 31.882 875 1.728 2.095 1.612 $ 9.505 $ 13.0% - .145 2.218 750 1.580 $ 7.457 $ 6.033 6.115 $ 925 $ 1.

4% 20.210 500 1.57 5.10 7.847 19.2% 31.11 6.61 3.0% $ $ 3.0% 43.06 9.0% 15.203.344.894.759 125 1.029. Inc.10 13.2 1.470 6.718 333 217. Pro Forma 1997 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 33.684 14.207.48 1997 $ 20% 58.383.203.274 4.135 6.639.552 2149.ma Financial Statements for Tire City.563 2.38 1.163 10.479.83 1.7 2.255.4% 7.7% 333 10.237.2 327.964003 2.5% 3.289 13.06 400 125 6.759 12.0% - $ 3 .

53% 5.90% 12.48 36.47 57.44 21.48 16.29 2.73% 5.32 1.29 Liquidity Current Ratio Quick Ratio Leverage Assets/Equity Debt/Total Capital Interest Coverage Activity Ratios Asset Turnover Days of Receivables Days of Inventory Days of Payables .50 1.39 39.85% 23.11% 13.35 1.25% 23.79 0.87% 4.37% 2. 1993 1994 1995 1996 1997 Profitability Return on Sales Return on Assets Return on Equity 4.Performance Ratios Tire City.22 2.64 2.09 2.79 0.92 0.60 55.16 41.81% 11.03 1.01 0.95 2.50 10.75% 24.55 56.72 37.62 56.02% 23.16 1.60 1.24 63.71 58.14 1.50 56.03 1.44 21.06% 13.64 2. Inc.92 1.

420       .093.8.

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