-
8/18/2019 CH 12 Case Study
1/15
Chapter
Financial Planning and Forecasting
Financial Statements
Case Study
Professor Dr. Hussein Seoudy
11
-
8/18/2019 CH 12 Case Study
2/15
Taylor Technologies Income Statement for
December 31,2012 Sales 1,800,000
Operating Costs 1,639,860 Earnings before interest
and taxes 160,140
Interest 9,140
Earnings before taxes 151,000
Taxes (40%)
60,400
Net Income 90,600
Dividends (60%) 54,360
Addition to retained earnings 36,240
Taylor technologies Inc.’s’ 2012 financial statements
areshown below:
22
-
8/18/2019 CH 12 Case Study
3/15
Taylor Technologies
Balance Sheet as ofDecember 31,2012
Cash 90,000 Accounts Payable 180,000
Receivables 180,000 Accruals 90,000
Inventories 360,000 Notes Payable 78,000
Total Current Assets 630,000 Total
CurrentLiabilities
348,000
Net Fixed Assets 720,000
Common Stock 900,000 Retained Earnings
102,000
Total Assets 1,350,000 Total Liabilities
andEquity
1,350,000
33
-
8/18/2019 CH 12 Case Study
4/15
Suppose 2013 sales are projected to increase by
10
percent over 2012 sales. Determine the additionalfunds needed.
Assume that the company was
operating at full capacity in 2013, that it cannotsell off any
of its fixed assets, and that anyrequired financing will be
borrowed as notespayable at 10 percent interest rate. Also,
assume
that assets, spontaneous liabilities, and operatingcosts are
expected to increase by the samepercentage as sales.
Use the forecasted financial statement method to
develop a pro-forma balance sheet and incomestatement for
December 31, 2013..
Use the pro-forma income statement todetermine the additional
funds needed.
44
-
8/18/2019 CH 12 Case Study
5/15
2012 ForecastBasisa
2012Forecast
FinancingFeed backs
2012 2nd
Forecast
Sales
Operating costs
EBIT
Interest
EBT
Taxes(40%)
Net income
Dividends(60%)
R. Earning (40%)
$1,800,000
1,639,860
$ 160,140
10,140
$ 150,000
60,000
$ 90,000
$ 54,000
$ 36,000
1.10 $1,980,000
1,803,846
$ 176,154
10,140
$ 166,014
66,406
$ 99,608
$ 59,765
$ 39,843
+ 6,815
$1,980,000
1,803,847
$ 176,154
16,955
$ 159,199
63,680
$ 95,519
$ 57,312
$ 38,207
Taylor Technology Inc.
Pro Forma Income Statement
December 31, 2013
55
-
8/18/2019 CH 12 Case Study
6/15
Taylor Technology Inc.
Pro Forma Balance Sheet
December 31, 2013
2012Forecast
Basis
2012
Forecast
Financing
Feed backs
2012 2nd
Forecast
Cash
Receivables
Inventory
Total current assets
Fixed assets
Total assets
Accts. payable
Notes payable
Accruals
Total Current liabilities
Common stock
Ret. Earnings
Total liabilities & equity
$ 90,000
180,000
360,000
$ 630,000
720,000
$1,350,000
$ 180,000
78,000
90,000
$ 348,000
900,000
102,000
$1,350,000
1.1
39,843
$ 99,000
198,000
396.000
$ 693,000
792,000
$1,485,000
$ 198,000
78,000
99,000
$ 375,000
900,000
141,843
$1,416,843
$+ 68,157
+ 38,207
$ 99,000
198,000
396,000
$ 693,000
792,000
$1,485,000
198,000
146,157
99,000
$ 443,157
900,000
140,000
$1,483,364
AFN = $ 68,157 $ 1,636
6
6
-
8/18/2019 CH 12 Case Study
7/15
2012 ForecastBasis
2012Forecast
FinancingFeed backs
2012 2nd
Forecast
Sales
Operating costs
EBITInterest
EBT
Taxes(40%)
Net income
Dividends(60%)
R. Earning (40%)
$1,800,000
1,639,860
$ 160,140
10,140
$ 150,000
60,000
$ 90,000
$ 54,000
$ 36,000
1.10 $1,980,000
1,803,846
$ 176,154
10,140
$ 166,014
66,406
$ 99,608
$ 59,765
$ 39,843
+ 6,815
$1,980,000
1,803,847
$ 176,154
16,955
$ 159,199
63,680
$ 95,519
$ 57,312
$ 38,207
Taylor Technology Inc.
Pro Forma Income Statement
December 31, 2013
7
7
-
8/18/2019 CH 12 Case Study
8/15
2012 ForecastBasis
1
ST
Pass2013
FinancingFeed backs
2012 2
nd
Forecast
Sales
Operating costs
EBITInterest
EBT
Taxes(40%)
Net income
Dividends(60%)
R. Earning (40%)
$1,800,000
1,639,860
$ 160,140
10,140
$ 150,000
60,000
$ 90,000
$ 54,000
$ 36,000
1.10 $1,980,000
1,803,846
$ 176,154
10,140
$ 166,014
66,406
$ 99,608
$ 59,765
$ 39,843
+ 6,815
$1,980,000
1,803,847
$ 176,154
16,955
$ 159,199
63,680
$ 95,519
$ 57,312
$ 38,207
Taylor Technology Inc.
Pro Forma Income Statement
December 31, 2013
88
-
8/18/2019 CH 12 Case Study
9/15
Taylor Technology Inc.
Pro Forma Balance Sheet
December 31, 2013
2012Forecast
Basis
2012
Forecast
Financing
Feed backs
2012 2nd
Forecast
Cash
Receivables
Inventory
Total current assets
Fixed assets
Total assets
Accts. payable
Notes payable
Accruals
Total Current liabilities
Common stock
Ret. Earnings
Total liabilities & equity
$ 90,000
180,000
360,000
$ 630,000
720,000
$1,350,000
$ 180,000
78,000
90,000
$ 348,000
900,000
102,000
$1,350,000
1.10
39,843
$ 99,000
198,000
396.000
$ 693,000
792,000
$1,485,000
$ 198,000
78,000
99,000
$ 375,000
900,000
141,843
$1,416,843
$+ 68,157
+ 38,207
$ 99,000
198,000
396,000
$ 693,000
792,000
$1,485,000
198,000
146,157
99,000
$ 443,157
900,000
140,000
$1,483,364
AFN = $ 68,157 $ 1,636
99
-
8/18/2019 CH 12 Case Study
10/15
Taylor Technology Inc.
Pro Forma Balance Sheet
December 31, 2013
2012Forecast
Basis
1ST Pass
2013
Financing
Feed backs
2012 2nd
Forecast
Cash
Receivables
Inventory
Total current assets
Fixed assets
Total assets
Accts. payable
Notes payable
Accruals
Total Current liabilities
Common stock
Ret. Earnings
Total liabilities & equity
$ 90,000
180,000
360,000
$ 630,000
720,000
$1,350,000
$ 180,000
78,000
90,000
$ 348,000
900,000
102,000
$1,350,000
1.10
39,843
$ 99,000
198,000
396.000
$ 693,000
792,000
$1,485,000
$ 198,000
78,000
99,000
$ 375,000
900,000
141,843
$1,416,843
$+ 68,157
+ 38,207
$ 99,000
198,000
396,000
$ 693,000
792,000
$1,485,000
198,000
146,157
99,000
$ 443,157
900,000
140,000
$1,483,364
AFN = $ 68,157 $ 1,636
1010
-
8/18/2019 CH 12 Case Study
11/15
2012 ForecastBasis
1
ST
Pass2013
FinancingFeed backs
2012 2
nd
Forecast
Sales
Operating costs
EBITInterest
EBT
Taxes(40%)
Net income
Dividends(60%)
R. Earning (40%)
$1,800,000
1,639,860
$ 160,140
10,140
$ 150,000
60,000
$ 90,000
$ 54,000
$ 36,000
1.10 $1,980,000
1,803,846
$ 176,154
10,140
$ 166,014
66,406
$ 99,608
$ 59,765
$ 39,843
+ 6,815
$1,980,000
1,803,847
$ 176,154
16,955
$ 159,199
63,680
$ 95,519
$ 57,312
$ 38,207
Taylor Technology Inc.
Pro Forma Income Statement
December 31, 2013
11
11
-
8/18/2019 CH 12 Case Study
12/15
2012 ForecastBasis
1
ST
Pass2013
FinancingFeed backs
2
nd
Pass2013
Sales
Operating costs
EBITInterest
EBT
Taxes(40%)
Net income
Dividends(60%)
R. Earning (40%)
$1,800,000
1,639,860
$ 160,140
10,140
$ 150,000
60,000
$ 90,000
$ 54,000
$ 36,000
1.10 $1,980,000
1,803,846
$ 176,154
10,140
$ 166,014
66,406
$ 99,608
$ 59,765
$ 39,843
+ 6,815
$1,980,000
1,803,847
$ 176,154
16,955
$ 159,199
63,680
$ 95,519
$ 57,312
$ 38,207
Taylor Technology Inc.
Pro Forma Income Statement
December 31, 2013
12
12
-
8/18/2019 CH 12 Case Study
13/15
Taylor Technology Inc.
Pro Forma Balance Sheet
December 31, 2013
2012Forecast
Basis
1ST Pass
2013
Financing
Feed backs
2012 2nd
Forecast
Cash
Receivables
Inventory
Total current assets
Fixed assetsTotal assets
Accts. payable
Notes payable
Accruals
Total Current liabilitiesCommon stock
Ret. Earnings
Total liabilities & equity
$ 90,000
180,000
360,000
$ 630,000
720,000$1,350,000
$ 180,000
78,000
90,000
$ 348,000
900,000
102,000
$1,350,000
1.10
39,843
$ 99,000
198,000
396.000
$ 693,000
792,000$1,485,000
$ 198,000
78,000
99,000
$ 375,000900,000
141,843
$1,416,843
$+ 68,157
+ 38,207
$ 99,000
198,000
396,000
$ 693,000
792,000$1,485,000
198,000
146,157
99,000
$ 443,157900,000
140,000
$1,483,364
AFN = $ 68,157 $ 1,636
1313
-
8/18/2019 CH 12 Case Study
14/15
Taylor Technology Inc.
Pro Forma Balance Sheet
December 31, 2013
2012Forecast
Basis
1ST Pass
2013
Financing
Feed backs
2nd Pass
2013
Cash
Receivables
Inventory
Total current assets
Fixed assetsTotal assets
Accts. payable
Notes payable
Accruals
Total Current liabilitiesCommon stock
Ret. Earnings
Total liabilities & equity
$ 90,000
180,000
360,000
$ 630,000
720,000$1,350,000
$ 180,000
78,000
90,000
$ 348,000
900,000
102,000
$1,350,000
1.10
39,843
$ 99,000
198,000
396.000
$ 693,000
792,000$1,485,000
$ 198,000
78,000
99,000
$ 375,000900,000
141,843
$1,416,843
$+ 68,157
+ 38,207
$ 99,000
198,000
396,000
$ 693,000
792,000$1,485,000
198,000
146,157
99,000
$ 443,157900,000
140,000
$1,483,364
AFN = $ 68,157 $ 1,636
14
14
-
8/18/2019 CH 12 Case Study
15/15
The nd
Chapter
Financial Planning and Forecasting
Financial Statements
Case Study
1515
