Case Preparation Questions
(Note that questions sometimes continue on the next page)
Use a spreadsheet program such as Excel for computations for all cases
1. Prepare one indirect cash flow statement (operating-investing-financing) for 2004-2005 and a second one for 2005-2006. Do not aggregate any accounts. 2. Calculate common-size income statement for each year. 3. Calculate all financial ratios (use “A Basis Set of Financial Ratios”) for each year. You will always be expected to have all ratios and cash flows statements for all years of data. Coming to class without all if these completed means that you are unprepared for quizzes and class discussions. 4. Identify the major factors influencing…show more content…
3. What is the current condition of the company? 4. Why has this profitable firm had to borrow so much? As the banker, what decision would you make?
Chang Dental Clinic
1. Do your normal full analysis of the company for 2002-2005. 2. The footnotes in this case are very important. Make sure the use the information in the footnotes when doing rations and pro formas. 3. Be careful with accumulated depreciation. Normally it shows as a positive number and is subtracted from GFA. In Chang Dental Clinic it is displayed as a negative number so it is added to GFA. Either way NGA would be the same but it might change how you so some of the computation. Also note that the Chang case uses the term “amortization” rather than “depreciation”. 4. Construct a pro forma income statement and balance sheet for fiscal year-end (FYE) January 2007. a. The case provides assumptions for many items and you should use those assumptions. For other items use the historical data as guidance. b. Amortization expense is the same as depreciation expense. c. The situation in this case is a little different than in our other cases because Chang involves the sale of the assets of the company (not the sale of the entire company). It is a bit like starting a new company. When someone purchases the assets of a company they