Can someone help with this case please, and:
Fill in all the blanks spaces in the spreadsheet for the 2017 column and the 2017 %rev column
Balance the B/S
Answer all questions in full sentence format
Please put in the correct number for forecasted PP&E based on narrative (I highlighted the phrase in the narrative)
Show work for how you calculated the forecasted interest for 2017.
Thank you so much for all your help.
Q.
After the financial analysis based on 2016 preliminary estimates was completed, a number of changes were adopted to improve financial and business results for S&S Air during 2016. The customer that awarded the large 40 aircraft order agreed to make interim payments as finished aircraft were delivered (for a price concession). Revenue was revised up slightly due to updated marketing plans. Expenses were trimmed and controls were established that greatly reduced on hand inventory needs. A portion of the line of credit was converted to a 5 year, fixed rate loan. Cash on hand and general liquidity was forecasted to improve to acceptable levels by the end of the year.
Mark and Marie approached Chris about creating a forecast for 2017. They had learned the value of the financial analysis done for 2016 and wanted to get a look at any issues or problems that might be looming in the future. Of particular concern was the continuing need for external funds as the firm continued to grow. The general consensus of Mark and Marie was that S&S Air should realize an increase in revenue of 17% in 2017 from the 2016 results, based on anticipated demand of aircraft. It was felt expenses would change by the same percent of sales as incurred in 2016. However, it was estimated that annual depreciation in 2017 would increase 70% (to a total of $1,075,000), due to the substantial increase in assets that were going to be needed. Finally, Chris said that her banking contract indicted that interest expense should be about 8% of both notes payable and long term debt in 2017.
By the end of 2016, the firm would be operating at capacity; it was estimated that further growth in 2017 would require $6,500,000 (including all depreciation â that is, adding $6.5 million to the 2016 Net PP&E to derive PP&E for 2017) in plant upgrades and additions to meet anticipated production volume. Everyone felt that all other asset categories (including cash) and current liabilities (including the line of credit) would change by percent of revenue. Both owners were concerned about where any needed external financing would come from. Neither was interested in raising any further equity, and agreed that they would likely secure long term financing for any external funds needed. The plan was to pay dividends totaling $400,000 in 2017.
Chris knew that a key exhibit would be the forecast mode. She planned to set up the model so that a key input would be the sales growth forecast. The âplugâ to reconcile the balance sheet would be long term debt.
Q U E S T I O N S (please use full sentences)
1) Completed forecast model. Fill in all blanks for the 2017 and 2017 % of rev columns.
2) Compare PM, ROA, and ROE from 2016 to 2017. Why the differences?
3) Compare debt ratios from 2016 to 2017. Why the differences?
4) Compare total asset turnover from 2016 to 2017. Why the difference? What observations can you make regarding capacity utilization from 2016 to 2017?
5) Estimate the maximum revenue possible given the new level of assets in 2017, based on TATO in 2016 (at full capacity).
6) If COGS could be decreased by 1% of revenue, how much increase in EBIT would result? Express the change in EBIT in both dollar terms and % change.
7) Do a DuPont analysis on S&S Air for both 2016 and 2017. If the owners asked you for any issues or concerns about the basic results forecasted for 2017, what would you tell them? Consider operating, investing, and financing issues.
7a) Operating comments:
7b) Investing comments:
7c) Financing comments:
Income statement 2016 % rev 2017 % rev Sales $21,566,000 100.0% 17%% COGS 14,786,000 68.6% % of rev 68.6% Other expenses 2,375,000 11.0% % of rev 11.0% Depreciation 625,000 2.9% given 1,075,000 EBIT 3,780,000 17.5% calc Interest 437,000 2.0% given 8.0% Taxable income 3,343,000 15.5% calc Taxes (40%) 1,337,200 6.2% calc TI * tax rate 40.0% Net income 2,005,800 9.3% calc Dividends 375,000 1.7% given 400,000 Add to RE 1,630,800 7.6% calc
B A L A N C E S H E E T 2016 % rev 2017 % Current Assets Cash 425,000 2.0% % of rev 2.0% Accounts rec. 855,000 4.0% % of rev 4.0% Inventory 689,000 3.2% % of rev 3.2% Total CA 1,969,000 9.1% calc Fixed assets Net PP&E 9,873,000 45.8% given 6,500,000 Total Assets 11,842,000 54.9% calc Current Liabilities Accounts Payable 727,000 3.4% % of rev 3.4% Notes Payable 1,467,000 6.8% % of rev 6.8% Total CL 2,194,000 10.2% calc Long-term debt 2,908,800 13.5% PLUG TOTAL CL + LTL 5,102,800 Shareholder Equity Common stock 120,000 0.6% no change Retained earnings 6,619,200 30.7% +2017 RE Total Equity 6,739,200 31.2% calc Total L&E 11,842,000 54.9% calc
Ratio Analysis 2016 2017 PM ROA ROE Debt / Equity Debt / Total Assets Equity Multiplier Total Asset TO
Thank you
Can someone help with this case please, and:
Fill in all the blanks spaces in the spreadsheet for the 2017 column and the 2017 %rev column
Balance the B/S
Answer all questions in full sentence format
Please put in the correct number for forecasted PP&E based on narrative (I highlighted the phrase in the narrative)
Show work for how you calculated the forecasted interest for 2017.
Thank you so much for all your help.
Q.
After the financial analysis based on 2016 preliminary estimates was completed, a number of changes were adopted to improve financial and business results for S&S Air during 2016. The customer that awarded the large 40 aircraft order agreed to make interim payments as finished aircraft were delivered (for a price concession). Revenue was revised up slightly due to updated marketing plans. Expenses were trimmed and controls were established that greatly reduced on hand inventory needs. A portion of the line of credit was converted to a 5 year, fixed rate loan. Cash on hand and general liquidity was forecasted to improve to acceptable levels by the end of the year.
Mark and Marie approached Chris about creating a forecast for 2017. They had learned the value of the financial analysis done for 2016 and wanted to get a look at any issues or problems that might be looming in the future. Of particular concern was the continuing need for external funds as the firm continued to grow. The general consensus of Mark and Marie was that S&S Air should realize an increase in revenue of 17% in 2017 from the 2016 results, based on anticipated demand of aircraft. It was felt expenses would change by the same percent of sales as incurred in 2016. However, it was estimated that annual depreciation in 2017 would increase 70% (to a total of $1,075,000), due to the substantial increase in assets that were going to be needed. Finally, Chris said that her banking contract indicted that interest expense should be about 8% of both notes payable and long term debt in 2017.
By the end of 2016, the firm would be operating at capacity; it was estimated that further growth in 2017 would require $6,500,000 (including all depreciation â that is, adding $6.5 million to the 2016 Net PP&E to derive PP&E for 2017) in plant upgrades and additions to meet anticipated production volume. Everyone felt that all other asset categories (including cash) and current liabilities (including the line of credit) would change by percent of revenue. Both owners were concerned about where any needed external financing would come from. Neither was interested in raising any further equity, and agreed that they would likely secure long term financing for any external funds needed. The plan was to pay dividends totaling $400,000 in 2017.
Chris knew that a key exhibit would be the forecast mode. She planned to set up the model so that a key input would be the sales growth forecast. The âplugâ to reconcile the balance sheet would be long term debt.
Q U E S T I O N S (please use full sentences)
1) Completed forecast model. Fill in all blanks for the 2017 and 2017 % of rev columns.
2) Compare PM, ROA, and ROE from 2016 to 2017. Why the differences?
3) Compare debt ratios from 2016 to 2017. Why the differences?
4) Compare total asset turnover from 2016 to 2017. Why the difference? What observations can you make regarding capacity utilization from 2016 to 2017?
5) Estimate the maximum revenue possible given the new level of assets in 2017, based on TATO in 2016 (at full capacity).
6) If COGS could be decreased by 1% of revenue, how much increase in EBIT would result? Express the change in EBIT in both dollar terms and % change.
7) Do a DuPont analysis on S&S Air for both 2016 and 2017. If the owners asked you for any issues or concerns about the basic results forecasted for 2017, what would you tell them? Consider operating, investing, and financing issues.
7a) Operating comments:
7b) Investing comments:
7c) Financing comments:
| Income statement | 2016 | % rev | 2017 | % rev | ||
| Sales | $21,566,000 | 100.0% | 17%% | |||
| COGS | 14,786,000 | 68.6% | % of rev | 68.6% | ||
| Other expenses | 2,375,000 | 11.0% | % of rev | 11.0% | ||
| Depreciation | 625,000 | 2.9% | given | 1,075,000 | ||
| EBIT | 3,780,000 | 17.5% | calc | |||
| Interest | 437,000 | 2.0% | given | 8.0% | ||
| Taxable income | 3,343,000 | 15.5% | calc | |||
| Taxes (40%) | 1,337,200 | 6.2% | calc TI * tax rate | 40.0% | ||
| Net income | 2,005,800 | 9.3% | calc | |||
| Dividends | 375,000 | 1.7% | given | 400,000 | ||
| Add to RE | 1,630,800 | 7.6% | calc |
| B A L A N C E S H E E T | ||||||
| 2016 | % rev | 2017 | % | |||
| Current Assets | ||||||
| Cash | 425,000 | 2.0% | % of rev | 2.0% | ||
| Accounts rec. | 855,000 | 4.0% | % of rev | 4.0% | ||
| Inventory | 689,000 | 3.2% | % of rev | 3.2% | ||
| Total CA | 1,969,000 | 9.1% | calc | |||
| Fixed assets | ||||||
| Net PP&E | 9,873,000 | 45.8% | given | 6,500,000 | ||
| Total Assets | 11,842,000 | 54.9% | calc | |||
| Current Liabilities | ||||||
| Accounts Payable | 727,000 | 3.4% | % of rev | 3.4% | ||
| Notes Payable | 1,467,000 | 6.8% | % of rev | 6.8% | ||
| Total CL | 2,194,000 | 10.2% | calc | |||
| Long-term debt | 2,908,800 | 13.5% | PLUG | |||
| TOTAL CL + LTL | 5,102,800 | |||||
| Shareholder Equity | ||||||
| Common stock | 120,000 | 0.6% | no change | |||
| Retained earnings | 6,619,200 | 30.7% | +2017 RE | |||
| Total Equity | 6,739,200 | 31.2% | calc | |||
| Total L&E | 11,842,000 | 54.9% | calc | |||
| Ratio Analysis | ||
| 2016 | 2017 | |
| PM | ||
| ROA | ||
| ROE | ||
| Debt / Equity | ||
| Debt / Total Assets | ||
| Equity Multiplier | ||
| Total Asset TO |
Thank you
Related questions
need some help filling out my balance and income statement using the following information given.
Using a Percentage of Sales method from 2017 results and the Given Information below, derive the 2018 Pro Forma (forecast) Income Statement and Balance Sheet (i.e. fill in the 2018 cells with the appropriate amounts).
Is there a âplugâ needed? If so, how much is it? What does it tell you about Scarletâs forecasted 2018 financial projections and what could Scarlet do to remedy the situation?
Based on Scarletâs 2017 & 2016 financials, what is her businessâs Sustainable Growth Rate (SGR)?
Given Information:
Scarlet believes that her 2018 Revenue figure will be 12% higher than her 2017 Revenue.
She estimates that her SG&A will go up by $1,000 from 2016-2017 since she plans on getting a part-time employee.
She doesnât intend to pay any dividends for 2018.
For her Balance Sheet forecasted items she uses only 2017 results, rather than taking an average of the results (average of the % of sales) from 2016 and 2017.
Scarlet assumes Interest Expense, Curr Portion of LT Debt, and Bank Loan Payable will remain the same in 2018 as they were in 2017.
Scarlet plans on issuing $1,000 of (new) Common Stock in 2018.
Scarlet determines that she will need to spend $3,700 for a new Lemon Press machine, which will be her entire CAPEX for 2018. We will assume depreciation will be $200 for this item for 2018, and the yearly depreciation/amortization expense for the rest of Scarletâs PPE will remain the same as it was in 2017 (and assume no asset sales were made in 2017).
Intangibles and Goodwill will remain unchanged in 2018.
She is not planning on disposing of any of her assets (i.e. no asset sales).
| Income Statement | ||
| 2018 | 2017 | |
| Sales / Revenue | 46,592 | 41,600 |
| Cost of Goods Sold (COGS) | ? | 24,960 |
| Gross Profit | ? | 16,640 |
| Selling, General & Administrative (SG&A) | 13,940 | 12,940 |
| Operating Profit | ? | 3,700 |
| Interest Expense | ? | 2,000 |
| Income Before Taxes | ? | 1,700 |
| Income Tax Expense | ? | 595 |
| Net Income | ? | 1,105 |
| Assume No Dividends Paid |
| Balance Sheet | |||||||||||
| Assets | Liabilities and Stockholders' Equity | ||||||||||
| Current Assets: | 2018 | 2017 | 2016 | Current Liabilities: | 2018 | 2017 | 2016 | ||||
| Cash | ? | 2,500 | 5,495 | A/P | ? | 1,100 | 300 | ||||
| A/R | ? | 800 | 1,300 | Deferred Revenue | ? | 700 | 1,000 | ||||
| Inventory | ? | 2,900 | 1,600 | Curr Portion of LT Debt | ? | 2,200 | 5,300 | ||||
| Prepaid Rent | ? | 2,200 | 1,800 | Wages Payable | ? | 2,600 | 4,600 | ||||
| Prepaid Insurance | ? | 1,400 | 1,900 | Tot Curr Liab | ? | 6,600 | 11,200 | ||||
| Tot Curr Assets | ? | 9,800 | 12,095 | ||||||||
| LT Liab | |||||||||||
| LT Assets | Bank Loan Payable | ? | 5,500 | 3,300 | |||||||
| PPE, Gross | ? | 9,500 | 5,500 | Tot Liab | ? | 12,100 | 14,500 | ||||
| Accumul Depr | ? | 2,800 | 2,000 | ||||||||
| PPE, Net | ? | 6,700 | 3,500 | Stockholders' Equity | |||||||
| Common Stock | 4,300 | 3,300 | 1,100 | ||||||||
| Intangibles | ? | 3,000 | 3,000 | Retained Earnings | ? | 5,100 | 3,995 | ||||
| Goodwill | ? | 1,000 | 1,000 | Total Stockholders' Equity | ? | 8,400 | 5,095 | ||||
| Total Assets | ? | 20,500 | 19,595 | Total Liab + Stockholders' Equity | ? | 20,500 | 19,595 | ||||
| 2a. | PLUG (if necessary): | ? | |||||||||
| What it tells you: | ? | ||||||||||
| 2b. | Sustainable Growth Rate (SGR): | ? | |||||||||
