Case 1 - Clarkson Lumber Template.xlsx

Total liabilities and net worth 1637 check total

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Total Liabilities and Net Worth \$1,637 Check: Total Assets - Total Liabilities & Equity = Income Statement Most Recent 1995 Input For 1996 Forecast Net sales \$4,519 Cost of Goods Sold: Beginning inventory 432 1995 ending inventory Purchases 3,579 End Inventory - Beg Inventory + COGS \$4,011 Projected Financial Statements Year Ending December 31, 1996 (thousands)

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Ending inventory 587 x 1996 sales Total Cost of Goods Sold \$3,424 x 1996 sales Gross profit 1,095 Operating expenses 940 x 1996 sales Earnings before interest and taxes \$155 Interest expense Bank loan (.11 x average loan) 36 avg loan during year x .11 Existing fixed rate debt 20 term loan payment Net income before income taxes \$99 22 See table to the right Net income \$77 Provision for income taxes a a The first \$50,000 of pretax profits is taxed at a 15% rate; the next \$25,000 are taxed at a 25% rate; the next \$25,000 are taxed at a 34% rate \$100,000 but less than \$335,000 are taxed at a 39% rate.
Forecast 1996 \$0 Forecast 1996

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e; and profits in excess of
Status Quo Scenario 2 Assumptions: 1. The historical conditions that prevailed in 1993-1995 will continue in 1996. 2. The sales volume for 1996 will be \$5.5 million, as Mr. Clarkson anticipates. Balance Sheet Most Recent 1995 Input For 1996 Forecast Cash \$56 x 1996 sales Accounts receivable, net 606 x 1996 sales Inventory 587 Avg inventory turnover Current assets \$1,249 Property, net 388 x 1996 sales Total Assets \$1,637 Notes payable, bank \$390 Note payable to Holtz, current portion 100 Notes payable, trade 127 Accounts payable 376 Days payables Accrued expenses 75 x 1996 sales Term loan, current portion 20 Remains constant Current liabilities \$1,088 Term loan 100 Note payable, Mr. Holtz 0 Total Liabilities \$1,188 Net worth 449 Previous RE + Add. To RE Total Liabilities and Net Worth \$1,637 Check: Total Assets - Total Liabilities & Equity = Income Statement Most Recent 1995 Input For 1996 Forecast Net sales \$4,519 Cost of Goods Sold: Beginning inventory 432 1995 ending inventory 3,579 End Inventory - Beg Inventory + COGS \$4,011 Projected Financial Statements Year Ending December 31, 1996 (thousands) Purchases a

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Ending inventory 587 - Inventory turnover Total Cost of Goods Sold \$3,424 0.0% x 1996 sales Gross profit 1,095 Operating expenses 940 0.0% x 1996 sales Earnings before interest and taxes \$155 Interest expense Bank loan (.11 x average loan) 36 #DIV/0! avg loan during year x .11 Existing fixed rate debt 20 term loan payment Net income before income taxes \$99 22 See table to the right Net income \$77 Provision for income taxes a a The first \$50,000 of pretax profits is taxed at a 15% rate; the next \$25,000 are taxed at a 25% rate; the next \$25,000 are taxed at a 34% rate \$100,000 but less than \$335,000 are taxed at a 39% rate.
Forecast 1996 \$0 Forecast 1996

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e; and profits in excess of
Improved Scenario 1 Assumptions: 1. The historical conditions that prevailed in 1993-1995 will continue in 1996. 2. The sales volume for 1996 will be \$5.5 million, as Mr. Clarkson anticipates. 3. All purchase discounts will be taken for the period April 1 to December 31, 1996.

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• Spring '09
• Balance Sheet, Generally Accepted Accounting Principles, Mr. Holtz, Mr. Clarkson

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