50.1K

Verified Solution

Link Copied!

Ceramic Structures has experienced rapid growth over the past several years. Sales are expected to grow at 15% per year for the next three years. Sales growth has been fueled by aggressive pricing as well as increased use of ceramics in high performance engines.

Asset growth has been financed by internal funds as well as the increased use of debt. At the end of 2016, the debt was restructured with a new 10% seven-year loan with principal payments of $1 million per year. In addition a $1.5 million working capital line was negotiated in 2015. It was increased to $2.5 million in 2017 and $3.5 million in 2018. Interest is charged at prime + 1%. (For class, we will use 9%.)

BALANCE SHEETS AT DECEMBER 31, 2014 2015 2016 2017 2018 Forecast 2019 2020 2021 2,363 4,779 3,450 10.592 5,193 15,785 1,178 5,643 5,213 12,033 6,551 18,584 899 8,467 6,985 16,351 8,235 24,586 470 9,946 8,071 18,487 9,325 27,812 250 11,507 9,020 20,777 10,354 31,131 ASSETS Cash Accounts receivable Inventory Current assets Net fixed assets Total assets 1,505 2,139 1,669 1,000 243 1,748 2,358 4,106 3,000 8,679 11,679 15,785 299 2,968 2,358 5,326 3,000 10,258 13,258 18,584 1,000 425 2,564 7,358 9,921 3,000 11,775 14,775 24,696 4,004 1,000 1,000 566 5,570 6,358 11,928 3,000 12,884 15,884 27,812 4,226 2,500 1,000 818 7,544 5,358 12,902 3,000 15,229 18,229 31,131 LIABILITIES AND EQUITIES Accounts payable Notes payable Current Portion LTD Accruals Current liabilites Long-term debt Total Liabilities Common stock Retained earnings Equities Total capital Cumulative Need for Funds Annual Need for For Funds 2014 2015 2016 2017 2018 2019 2020 2021 26,470 20,087 6,383 33,856 25,386 8,471 42,709 32,199 10,510 56,196 45,125 11,071 70,245 55,560 14,685 Sales Cost of Goods Gross Profit 1,324 1,642 1.064 289 4,318 2,065 330 1,735 798 937 1,693 1,726 1,342 342 5,103 3,368 2,563 1,815 1,666 487 6,531 3,979 1,170 2,809 1.292 1,517 3,372 1,910 1,910 703 7,895 3,176 1,123 2,053 944 1,109 4.215 2,010 2,121 772 9,118 5,566 1,223 4,344 1,998 2,346 G and A expenses Fixed operating expenses Depreciation Miscellaneous Total operating expenses EBIT Interest EBT Taxes Net income 444 2,924 1,345 1,579 100.00% 75.89% 24.11% 100.00% 74.98% 25.02% 100.00% 75.39% 24.61% 100.00% 80.30% 19.70% 100.00% 79.09% 20.91% Sales Cost of Goods Gross Profit 5.00% 6.20% 4.02% 1.09% 16.31% 7.80% 1.25% 6.55% 46.00% 3.54% 5.00% 5.10% 3.96% 1.01% 15.07% 9.95% 1.31% 8.64% 46.00% 4.66% 6.00% 4.25% 3.90% 1.14% 15.29% 9.32% 2.74% 6.58% 46.00% 3.55% 6.00% 3.40% 3.40% 1.25% 14.05% 5.65% 2.00% 3.65% 46.00% 1.97% 6.00% 2.86% 3.02% 1.10% 12.98% 7.92% 1.74% 6.18% 46.00% 3.34% G and A expenses Fixed operating expenses Depreciation Miscellaneous Total operating expenses EBIT Interest EBT Taxes Net income 8.93% 18.06% 13.03% 40.01% 19.62% 59.63% 3.48% 16.67% 15.40% 35.54% 19.35% 54.89% 2.10% 19.83% 16.35% 38.28% 19.28% 57.57% 0.84% 17.70% 14.36% 32.90% 16.59% 49.49% 0.36% 16.38% 12.84% 29.58% 14.74% 44.32% ASSETS Cash Accounts receivable Inventory Current assets Net fixed assets Total assets 5.69% 5.01% 4.93% 2.95% 7.13% 1.78% 1.78% 6.02% 3.56% 1.42% LIABILITIES AND EQUITIES Accounts payable Notes payable Current Portion LTD 2.34% 0.92% 6.60% 8.91% 15.51% 11.33% 32.79% 44.12% 59.63% 0.88% 8.77% 6.96% 15.73% 8.86% 30.30% 39.16% 54.89% 1.00% 6.00% 17.23% 23.23% 7.02% 27.57% 34.60% 57.83% 1.01% 9.91% 11.31% 21.23% 5.34% 22.93% 28.27% 49.49% 1.16% 10.74% 7.63% 18.37% 4.27% 21.68% 25.95% 44.32% Accruals Current liabilites Long-term debt Total Liabilities Common stock Retained earnings Equities Total capital BALANCE SHEETS AT DECEMBER 31, 2014 2015 2016 2017 2018 Forecast 2019 2020 2021 2,363 4,779 3,450 10.592 5,193 15,785 1,178 5,643 5,213 12,033 6,551 18,584 899 8,467 6,985 16,351 8,235 24,586 470 9,946 8,071 18,487 9,325 27,812 250 11,507 9,020 20,777 10,354 31,131 ASSETS Cash Accounts receivable Inventory Current assets Net fixed assets Total assets 1,505 2,139 1,669 1,000 243 1,748 2,358 4,106 3,000 8,679 11,679 15,785 299 2,968 2,358 5,326 3,000 10,258 13,258 18,584 1,000 425 2,564 7,358 9,921 3,000 11,775 14,775 24,696 4,004 1,000 1,000 566 5,570 6,358 11,928 3,000 12,884 15,884 27,812 4,226 2,500 1,000 818 7,544 5,358 12,902 3,000 15,229 18,229 31,131 LIABILITIES AND EQUITIES Accounts payable Notes payable Current Portion LTD Accruals Current liabilites Long-term debt Total Liabilities Common stock Retained earnings Equities Total capital Cumulative Need for Funds Annual Need for For Funds 2014 2015 2016 2017 2018 2019 2020 2021 26,470 20,087 6,383 33,856 25,386 8,471 42,709 32,199 10,510 56,196 45,125 11,071 70,245 55,560 14,685 Sales Cost of Goods Gross Profit 1,324 1,642 1.064 289 4,318 2,065 330 1,735 798 937 1,693 1,726 1,342 342 5,103 3,368 2,563 1,815 1,666 487 6,531 3,979 1,170 2,809 1.292 1,517 3,372 1,910 1,910 703 7,895 3,176 1,123 2,053 944 1,109 4.215 2,010 2,121 772 9,118 5,566 1,223 4,344 1,998 2,346 G and A expenses Fixed operating expenses Depreciation Miscellaneous Total operating expenses EBIT Interest EBT Taxes Net income 444 2,924 1,345 1,579 100.00% 75.89% 24.11% 100.00% 74.98% 25.02% 100.00% 75.39% 24.61% 100.00% 80.30% 19.70% 100.00% 79.09% 20.91% Sales Cost of Goods Gross Profit 5.00% 6.20% 4.02% 1.09% 16.31% 7.80% 1.25% 6.55% 46.00% 3.54% 5.00% 5.10% 3.96% 1.01% 15.07% 9.95% 1.31% 8.64% 46.00% 4.66% 6.00% 4.25% 3.90% 1.14% 15.29% 9.32% 2.74% 6.58% 46.00% 3.55% 6.00% 3.40% 3.40% 1.25% 14.05% 5.65% 2.00% 3.65% 46.00% 1.97% 6.00% 2.86% 3.02% 1.10% 12.98% 7.92% 1.74% 6.18% 46.00% 3.34% G and A expenses Fixed operating expenses Depreciation Miscellaneous Total operating expenses EBIT Interest EBT Taxes Net income 8.93% 18.06% 13.03% 40.01% 19.62% 59.63% 3.48% 16.67% 15.40% 35.54% 19.35% 54.89% 2.10% 19.83% 16.35% 38.28% 19.28% 57.57% 0.84% 17.70% 14.36% 32.90% 16.59% 49.49% 0.36% 16.38% 12.84% 29.58% 14.74% 44.32% ASSETS Cash Accounts receivable Inventory Current assets Net fixed assets Total assets 5.69% 5.01% 4.93% 2.95% 7.13% 1.78% 1.78% 6.02% 3.56% 1.42% LIABILITIES AND EQUITIES Accounts payable Notes payable Current Portion LTD 2.34% 0.92% 6.60% 8.91% 15.51% 11.33% 32.79% 44.12% 59.63% 0.88% 8.77% 6.96% 15.73% 8.86% 30.30% 39.16% 54.89% 1.00% 6.00% 17.23% 23.23% 7.02% 27.57% 34.60% 57.83% 1.01% 9.91% 11.31% 21.23% 5.34% 22.93% 28.27% 49.49% 1.16% 10.74% 7.63% 18.37% 4.27% 21.68% 25.95% 44.32% Accruals Current liabilites Long-term debt Total Liabilities Common stock Retained earnings Equities Total capital

Answer & Explanation Solved by verified expert

See Answer