Instant noodle company
DO THE BALANCE SHEET AFTER FORECASTING THE INCOME STATEMENT.
Given:
Year 0:
Cash 50,000,000
Shares 10,000 shares
5,000 par value
Year 1:
Facility 25,000,000 cost
15 years of useful life
2,500,000 salvage value
Sizes Selling Price Volume (Yr 1) Cost/unit (Yr 1)
Regular 20 150,000 8
Large 35 230,000 10
Ending AR level 20% revenue
Ending inventory 35% of COGS
Ending AP 15% of COGS
Land 2,000 square meters
1,500 price per square meter
Rent Expense 3,000,000 CONSTANT
Tax rate 35%
Accrued salaries at year-end 25%
Accrued utilities at year-end 20%
Year 2:
Volume growth (Yr 2) 60%
Selling Price same
Cost/unit same
AR turnover 5
Formula: AR turnover = credit sales/average AR
Credit sales 80% of revenue
Average AR Average AR for the past 2 years (current year and last year)
Inventory turnover 6
Formula: Inventory turnover = COGS/average inventory
Average inventory Average inventory for the past 2 years (current year and last year)
AP turnover 5.50 credit purchases
Formula: AP turnover = credit purchases/average AP
Credit purchases 95% of purchases
Average AP Average AP for the past 2 years (current year and last year)
Year 3:
Volume growth 250%
Price same
Cost per unit
Regular 11
Large 16
Bond Issuance
Bonds (par value) 15,000,000
Coupon rate 10%
Term (years) 5
Facility improvement 4,000,000
Depreciable over 10 yrs at no salvage value
Marketing expense 1:4 marketing to sales
*for every peso spent on marketing, 4 pesos is earned on sales
*Those not mentioned in Year 3 have the same computation as those in Year 2.
Year 4:
Volume growth 30%
Selling Price
Regular 22
Large 36
Cost per unit
Regular 14
Large 21
AR turnover 4.5
Inventory turnover 5
AP turnover 5
Marketing expense 1:7 marketing to sales
Income Statement
Year 0 1 2
Investment in Facility (25,000,000)
Working Capital:
AR (2,210,000)
Inventory (1,225,000)
AP 525,000
Selling Price - Regular 20 20
Units Sold 150,000 240,000
Revenues 3,000,000 4,800,000
Cost per unit 8 8
Cost of Goods Sold 1,200,000 1,920,000
Gross Profit 1,800,000 2,880,000
Selling Price - Large 35 35
Units Sold 230,000 368,000
Revenues 8,050,000 12,880,000
Cost per unit 10 10
Cost of Goods Sold 2,300,000 3,680,000
Gross Profit 5,750,000 9,200,000
Total Revenue 11,050,000 17,680,000
Total COGS 3,500,000 5,600,000
Total Gross Profit 7,550,000 12,080,000
Operating Expenses:
Marketing 10,000,000 5,000,000
Selling 500,000 1,500,000
Salaries 2,000,000 2,000,000
Utilities 1,000,000 2,000,000
Rent 3,000,000 3,000,000
Total OPEX 16,500,000 13,500,000
EBITDA (8,950,000) (1,420,000)
Depreciation expense (1,500,000) (1,500,000)
Interest expense
EBIT (10,450,000) (2,920,000)
Taxes 3,657,500 1,022,000
NOPAT (6,792,500) (1,898,000)
Balance Sheet
Year 0 Year 1 Year 2
Cash 50,000,000 17,497,500 17,328,264
AR 2,210,000 3,447,600
Inventory 1,225,000 641,667
Facility 25,000,000 25,000,000
Accum dep (1,500,000) (3,000,000)
Total Assets 50,000,000 44,432,500 43,417,530
AP 525,000 1,208,030
Accrued salaries 500,000 500,000
Accrued utilities 200,000 400,000
Bonds payable
Share Capital 50,000,000 50,000,000 50,000,000
Retained earnings (6,792,500) (8,690,500)
Total 50,000,000 44,432,500 43,417,530
Net Fixed Asset - 23,500,000 22,000,000
Net Common Equity 50,000,000 43,207,500 41,309,500
Cash Flow Statement
Net income (loss) (6,792,500) (1,898,000)
Depreciation 1,500,000 1,500,000
Total (5,292,500) (398,000)
AR (2,210,000) (1,237,600)
Inventory (1,225,000) 583,333
AP 525,000 683,030
Accrued salaries 500,000 -
Accrued utilities 200,000 200,000
Cash flow from operating (7,502,500) (169,236)
Investment in facility (25,000,000)
Cash flow from investing (25,000,000)
Sale of bonds
Cash flow from financing
Net change in cash (32,502,500) (169,236)
Ratios
Year 1 Year 2
Liquidity ratios:
Current ratio 17.0878 10.1600
Quick ratio 16.0878 9.8556
Cash ratio 14.2837 8.2201
Efficiency ratios:
Total Asset Turnover 0.2340 0.4025
Fixed Asset Turnover 0.9404 0.7771
Equity Turnover 0.2371 0.4184
nd last year)
ting, 4 pesos is earned on sales
3 4
20 22
840,000 1,092,000
16,800,000 24,024,000
11 14
9,240,000 15,288,000
7,560,000 8,736,000
35 36
1,288,000 1,674,400
45,080,000 60,278,400
16 21
20,608,000 35,162,400
24,472,000 25,116,000
61,880,000 84,302,400
29,848,000 50,450,400
32,032,000 33,852,000
15,470,000 12,043,200
3,000,000 4,000,000
3,000,000 3,500,000
2,500,000 2,600,000
3,000,000 3,000,000
26,970,000 25,143,200
5,062,000 8,708,800
(1,900,000) (1,900,000)
(1,500,000) (1,500,000)
1,662,000 5,308,800
(581,700) (1,858,080)
1,080,300 3,450,720 219.42238%
Percentage change of NI after tax from Yr 3 to 4
Year 3 Year 4
20,974,939 23,211,820.0727
16,354,000 13,620,186.6667
9,307,667 10,872,493.3333
29,000,000 29,000,000.0000
(4,900,000) (6,800,000.0000)
70,736,606 69,904,500.0727
12,096,806 7,668,980.0727
750,000 875,000.0000
500,000 520,000.0000
15,000,000 15,000,000.0000
50,000,000 50,000,000.0000
(7,610,200) (4,159,480.0000)
70,736,606 69,904,500.0727
24,100,000 22,200,000
42,389,800 45,840,520
1,080,300 3,450,720
1,900,000 1,900,000
2,980,300 5,350,720
(12,906,400) 2,733,813
(8,666,000) (1,564,827)
10,888,776 (4,427,826)
250,000 125,000
100,000 20,000
(7,353,324) 2,236,881
(4,000,000)
(4,000,000)
15,000,000
15,000,000
3,646,676 2,236,881
Year 3 Year 4
3.4942 5.2631
2.7968 4.0636
1.5715 2.5609
1.0841 1.1988
2.6846 3.6416
1.4786 1.9110
