BAFI 355 - Week 10 (Wed) - Forecasting and Financial Planning

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School

Case Western Reserve University *

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Course

355

Subject

Finance

Date

Apr 3, 2024

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xlsx

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Uploaded by SuperHumanPencilPelican37

Fine Tire and Auto Repair Fine Tire and Auto Repair is owned by my family. It consists of 10 retail tire and auto repair shops in the Greate A bank lent the company funds to expand the warehouse a few years ago and the company is required to repa Financial Statements for Fine Tire and Auto Repair Dollars in Thousands 50.0% INCOME STATEMENT 2020 2021 2022 2023E 25% 15% Net sales $ 16,230 $ 20,355 $ 23,505 $ 35,258 Cost of sales 9,430 11,898 13,612 $ 20,418 Gross profit 6,800 8,457 9,893 14,840 Selling, general, and administrative 5,195 6,352 7,471 11,207 Depreciation 160 180 213 320 Operating income (EBIT) 1,445 1,925 2,209 3,314 Net interest expense 119 106 94 81 Pre-tax income 1,326 1,819 2,115 3,233 Income taxes 546 822 925 1,414 Net income $ 780 $ 997 $ 1,190 $ 1,819 Tax rate on income 41.2% 45.2% 43.7% 43.7% Dividends $ 155 $ 200 $ 240 $ 367 Retained Earnings $ 625 $ 797 $ 950 $ 1452 Dividend Payout Ratio 19.9% 20.1% 20.2% 20.2% Interest Rate 10.6% 10.6% 10.7% 10.7% BALANCE SHEET 2020 2021 2022 2023E Assets Cash balances $ 508 $ 609 $ 706 -1,103 Accounts receivable 532 500 658 987 Check echo 360 11:20 Inventories 3,643 4,433 5,184 7,776 Total current assets 4,683 5,542 6,548 7,660 Gross plant & equipment 3,232 3,795 4,163 6,245 Accumulated depreciation 1,335 1,515 1,728 2,048 Net plant & equipment 1,897 2,280 2,435 4,197 Total assets $ 6,580 $ 7,822 $ 8,983 $ 11,857 Liabilities Current maturities $ 125 $ 125 $ 125 $ 125 Accounts payable 1,042 1,325 1,440 2,160 Accrued expenses 1,145 1,432 1,653 2,480 Sales Growth

Total current liabilities 2,312 2,882 3,218 4,765 Long-term debt 1,000 875 750 $625.0 Common stock 1,135 1,135 1,135 1,135 Retained earnings 2,133 2,930 3,880 5,332 Total shareholders' equity 3,268 4,065 5,015 6,467 Total Liabilities and Equity $ 6,580 $ 7,822 $ 8,983 $ 11,857 Cash Balance Target --> 1,059 Forecast Cash Balace --> -1,103 External Financing Needed (EFN) --> 2,162 RATIO ANALYSIS 2020 2021 2022 2023E Cash Conversion Cycle: Days sales in receivables (DSO) 12 9 10 10 Days sales in inventories (DSI) 141 136 139 139 Days in payables (DPO) 40 41 39 39 Cash conversion cycle 113 104 111 111

r – Mini Case Study er Cleveland area, plus a warehouse to supply the 10 stores. ay $125k per year in principal each year; there is no other “financial debt”. COMMON SIZE INCOME STATEMENT (USE SALES AS COMMON FIGURE) 2020 2021 2022 2023E 100.0% 100.0% 100.0% 100.0% 58.1% 58.5% 57.9% 57.9% 41.9% 41.5% 42.1% 42.1% 32.0% 31.2% 31.8% 31.8% 1.0% 0.9% 0.9% 0.9% 8.9% 9.5% 9.4% 9.4% 0.7% 0.5% 0.4% 0.4% 8.2% 8.9% 9.0% 9.0% 3.4% 4.0% 3.9% 3.9% 4.8% 4.9% 5.1% 5.1% COMMON SIZE BALANCE SHEET ("NET SALES" AS COMMON FIGURE) <-- Note: this is different from what we did last class 2020 2021 2022 as this time the common figure is "Net Sales" rather than "Total Assets". That's because this is 3.1% 3.0% 3.0% a "Percentage of Sales" model. 3.3% 2.5% 2.8% 22.4% 21.8% 22.1% 28.9% 27.2% 27.9% 0 0 0 19.9% 18.6% 17.7% 8.2% 7.4% 7.4% 11.7% 11.2% 10.4% 0 0 0 40.5% 38.4% 38.2% 0 0 0 0 0 0 0.8% 0.6% 0.5% 6.4% 6.5% 6.1% 7.1% 7.0% 7.0%

14.2% 14.2% 13.7% 0 0 0 6.2% 4.3% 3.2% 0 0 0 7.0% 5.6% 4.8% 13.1% 14.4% 16.5% 20.1% 20.0% 21.3% 0 0 0 40.5% 38.4% 38.2% Accounts Receivable / (Net Sales/365) Inventories / (COGS/365) Accounts Payable / (COGS/365) DSO+DSI-DPO

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