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Using the Base Case, calculate the annual sales growth for 2020E...

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Model Inputs and Assumptions General Assumptions Forecast Scenario Days Per Year 365 Base Case Capital Assumptions Asset Salvage Value (% of Capital Addition) 10% Asset Useful Life (New Additions) 4 Years

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2015 2016 2017 2018 2019 2020E 2021E 2022E 2023E 2024E Income Statement Sales Revenue $102,007 $118,086 $131,345 $142,341 $150,772 Cost of Sales ($39,023) ($48,004) ($49,123) ($53,254) ($57,310) Gross Profit $62,984 $70,082 $82,222 $89,087 $93,462 SG&A Expense ($37,390) ($32,783) ($33,959) ($34,022) ($36,657) Depreciation Expense ($19,500) ($18, 150) ($17,205) ($16,544) ($16,080) Interest Expense ($2,500) ($2,500) ($1,500) ($900 ($900) Income Before Income Taxes $3,594 $16,649 $29,558 $37,622 $39,825 Income Taxes ($1,120) ($4,858 ($8,483) ($10,908) ($11,598) Net Income $2,474 $11,791 $21,075 $26,713 $28,227

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2015 2016 2017 2018 2019 2020E 2021E 2022E 2023E 2024E Balance Sheet Assets Cash & Cash Equivalents $167,971 $181,210 $183,715 $211,069 $239,550 Accounts Receivable $5, 100 $5,904 $6,567 $7,117 $7,539 Inventories $7,805 $9,601 $9,825 $10,531 $11,342 Total Current Assets $180,876 $196,715 $200, 107 $228,717 $258,430 Property, Plant & Equipment $45,500 $42,350 $40,145 $38,602 $37,521 Total Assets $226,376 $239,065 $240,252 $267,319 $295,951 Liabilities Accounts Payable $3,902 $4,800 $4,912 $5,265 $5,671 Total Current Liabilities $3,902 $4,800 $4,912 $5,265 $5,671 Long-Term Debt $50,000 $50,000 $30,000 $30,000 $30,000 Total Liabilities $53,902 $54,800 $34,912 $35,265 $35,671 Shareholders' Equity Share Capital $170,000 $170,000 $170,000 $170,000 $170,000 Retained Earnings $2,474 $14,265 $35,340 $62,053 $90,280 Total Shareholders' Equity $172,474 $184,265 $205,340 $232,053 $260,280 Total Liabilities and Shareholders' Equity $226,376 $239,065 $240,252 $267,319 $295,951

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2015 2016 2017 2018 2019 2020E 2021E 2022E 2023E 2024E Cash Flow Statement Operating Activities Net Income $2,474 $11,791 $21,075 $26,713 $28,227 Adjustments For: Depreciation Expense $19,500 $18, 150 $17,205 $16,544 $16,080 Changes in Non-Cash Working Capital ($9,003) ($1,702) ($775) ($903) ($827) Cash Generated From Operating Activities $12,971 $28,239 $37,505 $42,354 $43,480 Investing Activities Additions to Property, Plant & Equipment ($15,000) ($15,000) ($15,000) ($15,000) ($15,000) Cash (Used For) Investing Activities ($15,000) ($15,000) ($15,000) ($15,000) ($15,000) Financing Activities Issuance (Repayment) of Debt SO SO ($20,000) SO SO Issuance (Buy-back) of Equity $170,000 SO SO SO SO Cash (Used For) Generated From Financing Activities $170,000 $0 ($20,000) $0 $0 Cash (Used) Generated in the Period $167,971 $13,239 $2,505 $27,354 $28,480 Cash & Cash Equivalents, Beginning of Period SO $167,971 $181,210 $183,715 $211,069 Cash & Cash Equivalents, End of Period $167,971 $181,210 $183,715 $211,069 $239,550

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2015 2016 2017 2018 2019 2020E 2021E 2022E 2023E 2024E Supporting Schedules Change in Non-Cash Working Capital Accounts Receivable $5, 100 $5,904 $6,567 $7,117 $7,539 Inventories $7,805 $9,601 $9,825 $10,531 $11,342 Accounts Payable $3,902 $4,800 $4,912 $5,265 $5,671 Total Working Capital $9,003 $10,705 $11,480 $12,382 $13,210 Change in Non-Cash Working Capital ($1,702) ($775) ($903) ($827) Asset Continuity Schedule PP&E, Opening Balance $50,000 $45,500 $42,350 $40, 145 $38,602 Capital Expenditures $15,000 $15,000 $15,000 $15,000 $15,000 Depreciation Expense ($19,500) ($18, 150) ($17,205) ($16,544) ($16,080) PP&E, Ending Balance $45,500 $42,350 $40, 145 $38,602 $37,521 Debt Schedule Total Debt, Opening Balance $50,000 $50,000 $50,000 $30,000 $30,000 Issuance (Repayment) $0 $0 ($20,000) $0 $0 Total Debt, Ending Balance $50,000 $50,000 $30,000 $30,000 $30,000 Interest Expense $2,500 $2,500 $1,500 $900 $900 Share Capital Schedule Share Capital, Opening Balance $0 $170,000 $170,000 $170,000 $170,000 Share Issuance (Buy-Back)) $170,000 $0 $0 $0 Share Capital, Ending Balance $170,000 $170,000 $170,000 $170,000 $170,000

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2020E 2021E 2022E 2023E 2024E Live Case Income Statement Assumptions Annual Sales Growth Cost of Sales (% of Sales) SG&A Expense (% of Sales) Depreciation Expense (On Existing Assets) Depreciation Expense (On New Additions) Total Depreciation Expense Interest Rate Effective Tax Rate Balance Sheet Assumptions Accounts Receivable (Days) Inventory (Days) Accounts Payable (Days) Capital Expenditures Debt Issuance (Repayment)

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2020E 2021E 2022E 2023E 2024E Scenario Inputs Base Case Income Statement Assumptions Annual Sales Growth (%) -+--- -+-- Cost of Sales (% of Sales) 38.0% 38.0%: 38.0% 38.0%: 38.0% SG&A Expense (% of Sales) 24.0% 24.0% 24.0%! 24.0% 24.0%! Depreciation Expense (On Existing Assets) $15,000 $15,000 $15,000 $15,000 $15,000 -+- Depreciation Expense (On New Additions) Total Depreciation Expense $15,000 $15,000 $15,000 $15,000 $15,000 Interest Rate 4.0% 4.0% 4.0% 4.0%: 4.0% ------+- Effective Tax Rate 30.0%! 30.0% 30.0% 30.0%! 30.0% Balance Sheet Assumptions Accounts Receivable (Days) 18: 18 18 -+---- 181 ----4- ----4- ---4- Inventory (Days) 70 70 70: 70 70 -+- -+- Accounts Payable (Days) 351 35 35: 351 -+- Capital Expenditures $20,000; $20,000 $20,000; $20,000; $20,000; Debt Issuance (Repayment) $20,000) ($10,000) --+- ----+- Equity Issued (Repaid) ----

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2020E 2021E 2022E 2023E 2024E Low Case Income Statement Assumptions Annual Sales Growth 5.0% 5.0% 5.0% 6.0% 5.0% --4 ----4. ----+- Cost of Sales (% of Sales) 45.0% 45.0% 45.0% 45.0% 45.0% SG&A Expense (% of Sales) 30.0% 30.0%! 30.0%! 30.0% 30.0%; Depreciation Expense (On Existing Assets) $15,000 $15,000 $15,000 $15,000 $15,000 Depreciation Expense (On New Additions) $3,000 $3,000 $3,000 $3,000; $3,000; Total Depreciation Expense $18,000 $18,000 $18,000 $18,000 $18,000 Interest Rate 4.0% 4.0% 4.0% 4.0%! 4.0% -+- Effective Tax Rate 30.0% 30.0% 30.0% 30.0% 30.0% Balance Sheet Assumptions Accounts Receivable (Days) 20; 201 20; 201 -+- ----+- ----4 Inventory (Days) 801 801 801 801 801 Accounts Payable (Days) 40 40: 40: 40 40: -4- Capital Expenditures $15,000 $15,000 $15,000; $15,000; $15,000; ---- Debt Issuance (Repayment) SO: SO! --- ---- ---- Equity Issued (Repaid) SO SO -----4.

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2020E 2021E 2022E 2023E 2024E High Case Income Statement Assumptions Annual Sales Growth 11.0% 11.0% 11.0% 11.0% 11.0% Cost of Sales (% of Sales) 30.0% 30.0% 30.0% 30.0% 30.0% SG&A Expense (% of Sales) 20.0% 20.0% 20.0% 20.0% 20.0% Depreciation Expense (On Existing Assets) $15,000 $15,000 $15,000 $15,000 $15,000 Depreciation Expense (On New Additions) $7,000 $7,000 $7,000 $7,000 $7,000 Total Depreciation Expense $22,000 $22,000 $22,000 $22,000 $22,000 Interest Rate 4.0% 4.0% 4.0% 4.0%; 4.0% -------+ ------+- ------+- -------+ -------4 Effective Tax Rate 30.0% 30.0%: 30.0%! 30.0% 30.0% Balance Sheet Assumptions Accounts Receivable (Days) 15 15 15: 151 15 -+- Inventory (Days) 651 65 651 551 65: -+- Accounts Payable (Days) 30 30 30 301 30; Capital Expenditures $30,000 $30,000 $30,000 $30,000 $30,000 Debt Issuance (Repayment) $20,000) 50 $10,000) SO: Equity Issued (Repaid) ($50,000) 50 SO

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Using the Base Case, calculate the annual sales growth for 2020E using a weighted-moving average of the past three years' growth rates, with the most recent year given a weight of 3, the next given a weight of 2 and the oldest given a weight of 1. What is the growth rate? Use this rate (exact calculation) for the entire forecast period in the Base Case.


7.60%

10.60%

9.40%

8.50%




Using the Base Case, calculate total depreciation expense for the year 2023E. Assume that depreciation expense on assets pre-2020E is $15,000 per year. Depreciation on capital expenditures made from 2020E-2024E assumes a 4-year useful life and a salvage value equal to 10% of the original cost.

 

$19,500

$20,000

$30,000

$33,000


 

Using the Base Case, calculate the change in non-cash working capital in 2024E.

 

$2,446

-$1,322

-$2,446

$1,322

 

 

Using the Low Case, calculate EBITDA in 2022E.

 

$24,434

$25,634

$60,144

$43,634

 

 

Using the Low Case, calculate the PP&E Turnover ratio for 2021E.

5.3x

2.4x

5.1x

0.5x

 

Using the High Case, calculate interest expense in 2021E.

 

$400

$800

$829

$1,200

 

 

Using the High Case, calculate the Debt-to-Total Capital ratio for 2020E.

 

0.09x

0.15x

0.18x

0.10x

 

 

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