256214662-Case-Flash-Memory-Inc-Solution - Flash Memory Inc Exhibit 1 Actual and Forecasted Financial Statements Assuming No Investment in New Product

256214662-Case-Flash-Memory-Inc-Solution - Flash Memory Inc...

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Flash Memory, Inc. Exhibit 1 Actual and Forecasted Financial Statements Assuming No Investment in New Product Line, No Sale of New Common Stock, and All Borrowings at 9.25% Income Statement ($000s except EPS) Actual Forecast 2007 2008 2009 2010 2011 2012 Sales $77,131 $80,953 $89,250 $120,000 $144,000 $144,000 $128,000 - YOY growth 5.0% 10.2% 34.5% 20.0% 0.0% -11.1% Cost of goods sold $62,519 $68,382 $72,424 $97,320 $116,784 $116,784 - % of sales 81.1% 84.5% 81.1% 81.1% 81.1% 81.1% Gross margin $14,612 $12,571 $16,826 $22,680 $27,216 $27,216 Research and development $3,726 $4,133 $4,416 $6,000 $7,200 $7,200 - % of sales 4.8% 5.1% 4.9% 5.0% 5.0% 5.0% Selling, general and administrative $6,594 $7,536 $7,458 $10,032 $12,038 $12,038 - % of sales 8.5% 9.3% 8.4% 8.4% 8.4% 8.4% Operating income $4,292 $902 $4,952 $6,648 $7,978 $7,978 Interest expense $480 $652 $735 $937 $1,323 $1,565 - Interest rate % 9.25% 9.25% 9.25% Other income (expenses) -$39 -$27 -$35 -$50 -$50 -$50 Income before income taxes $3,773 $223 $4,182 $5,661 $6,604 $6,363 Income taxes $1,509 $89 $1,673 $2,264 $2,642 $2,545 - % of income before taxes 40.0% 39.9% 40.0% Net income $2,264 $134 $2,509 $3,396 $3,963 $3,818 Earnings per share $1.52 $0.09 $1.68 $2.28 $2.66 $2.56 Exhibit 1 (continued) Balance Sheet ($000s except shares outstanding and book value per share) Actual Forecast 2007 2008 2009 2010 2011 2012 Cash $2,536 $2,218 $2,934 $3,960 $4,752 $4,752 - % of sales 3.3% 2.7% 3.3% 3.3% 3.3% 3.3% Accounts receivable $10,988 $12,864 $14,671 $19,726 $23,671 $23,671 - Days of sales 33 33 37 60 60 60 Inventories $9,592 $11,072 $11,509 $13,865 $16,638 $16,638 - Days of COGS 56 59 58 52 52 52 Prepaid expenses $309 $324 $357 $480 $576 $576 - % of sales 0.3% 0.2% 0.2% 0.4% 0.4% 0.4% Total current assets $23,425 $26,478 $29,471 $38,031 $45,637 $45,637 Property, plant & equipment at cost $5,306 $6,116 $7,282 $8,182 $9,082 $9,982 Less: Accumulated depreciation $792 $1,174 $1,633 $2,179 $2,793 $3,474 Net property, plant & equipment $4,514 $4,942 $5,649 $6,003 $6,290 $6,508 Total assets $27,939 $31,420 $35,120 $44,034 $51,926 $52,145 Accounts payable $3,084 $4,268 $3,929 $4,799 $5,759 $5,759 - Days purchases 30 38 33 30 30 30 Notes payable $6,620 $8,873 $10,132 $14,306 $16,914 $13,325 Accrued expenses $563 $591 $652 $876 $1,051 $1,051 Income taxes payable $151 $9 $167 $226 $264 $255 - % of taxes 10% 10% 10% 10% 10% 10% Other current liabilities $478 $502 $554 $744 $893 $893 - % of sales 0.6% 0.6% 0.6% 0.6% 0.6% 0.6% Total current liabilities $10,896 $14,243 $15,434 $20,951 $24,881 $21,282 Common stock at $0.01 per share par value $15 $15 $15 $15 $15 $15 Paid in capital in excess of par value $7,980 $7,980 $7,980 $7,980 $7,980 $7,980 Retained earnings $9,048 $9,182 $11,691 $15,087 $19,050 $22,868 Total shareholders' equity $17,043 $17,177 $19,686 $23,082 $27,045 $30,863 Total liabilities & shareholders' equity $27,939 $31,420 $35,120 $44,034 $51,926 $52,145 Number of shares outstanding 1,491,662 1,491,662 1,491,662 1,491,662 1,491,662 1,491,662 Book value per share $11.43 $11.52 $13.20 $15.47 $18.13 $20.69 Return on equity 13.3% 0.8% 12.7% 14.7% 14.7% 12.4% Interest coverage ratio (times) 8.9 1.4 6.7 7.1 6.0 5.1 Notes payable / accounts receivable 60.2% 69.0% 69.1% 72.5% 71.5% 56.3% Notes payable / shareholders' equity 38.8% 51.7% 51.5% 62.0% 62.5% 43.2% Total liabilities / shareholders' equity 63.9% 82.9% 78.4% 90.8% 92.0% 69.0%
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Flash Memory, Inc. Exhibit 2 Calculation of Cost of Capital Step 1 - Calculation of asset Beta for the industry using market value weights: Micron Technology D = book value of debt (4-30-2010) $2,760 25.8% BVE = book value of equity (4-30-2010) $5,603 MVE = market value of equity (4-30-2010) $7,925 74.2% 1.25 1.03 SanDisk Corporation D = book value of debt (4-30-2010) $975 9.6% BVE = book value of equity (4-30-2010) $4,157 MVE = market value of equity (4-30-2010) $9,135 90.4% 1.36 1.28 STEC, Inc.
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  • Fall '16
  • Johan fernandez
  • Finance, Balance Sheet, Generally Accepted Accounting Principles, Flash memory, new product line

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