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Liabilities
Current maturities of LT debt $ 125 $ 125 $ 125 $ 125
Accounts Payable $ 1,792 $ 1,729 $ 2,150 $ 2,075
Accrued Expenses $ 1,986 $ 1,983 $ 2,383 $ 2,379
Total Current Liabilities $ 3,903 $ 3,837 $ 4,658 $ 4,579
Assumptions
Historical 3 Yr Growth 20.00%
Capital Budget -1996 $2,000
Capital Budget 1997 $400
Total capital Budget-1996-1997 $2,400
Depreciation on Investment-1997 5.00%
Assumed Inventory-1996 $1,625
Implied Inventory/Sales-1996
Assumed Cash/Sales-1996-1997 3.00%
Historical Tax Rate
Tax Rate -1993 41.18%
Tax Rate 1994 45.19%
Tax Rate-1995 43.74%
Average Historical Tax Rate 43.37%
Historical Payouts
Payout-1993 19.87%
Payout-1994 20.06%
Payout-1995 20.17%
Average Payout 20.03%
Interest Rate on Loan 10.00%
50.00%
24.00%
10.00%
PM 5.06%
Free Cash Flow
1996 1997
$ 1,901.94 $ (52.81)
5% $ 1,877.87 $ 452.99
10% $ 1,885.89 $ 294.54
15% $ 1,893.92 $ 125.93
20% $ 1,901.94 $ (52.81)
25% $ 1,909.96 $ (241.71)
30% $ 1,917.99 $ (440.76)
35% $ 1,926.01 $ (649.95)
40% $ 1,934.03 $ (869.29)
1996 1997
$ 351 $ 999
6000 $ (976.52) $ (388.89)
7000 $ (523.65) $ 84.49
8000 $ (70.78) $ 557.88
9000 $ 382.10 $ 1,031.26
10000 $ 834.97 $ 1,504.64
11000 $ 1,287.85 $ 1,978.03
12000 $ 1,740.72 $ 2,451.41
13000 $ 2,193.60 $ 2,924.80
Tire City Case
Actual Projections
Income Statement 1993 1994 1995 1996 1997
Sales $16,230 $20,355 $23,505 $ 28,206 $ 33,847
Cost of Sales $9,430 $11,898 $13,612 $ 16,403 $ 19,684
Gross Profits $6,800 $8,457 $9,893 $ 11,803 $ 14,163
SGA $5,195 $6,352 $7,471 $ 8,932 $ 10,718
Depreciation $160 $180 $213 $213 $ 333
Net Interest Expense $119 $106 $94 $ 88 $ 110
Pre-Tax Income $1,326 $1,819 $2,115 $ 2,570 $ 3,002
Income Taxes $546 $822 $925 $ 1,114.70 $ 1,301.85
Net Income $780 $997 $1,190 $ 1,456 $ 1,700
Dividends $155 $200 $240 $ 292 $ 341
Addition to RE $625 $797 $950 $ 1,164 $ 1,359
Balance Sheet
Assets 1993 1994 1995 $ 1,996 $ 1,997
Surplus Cash $ - $ -
Cash $508 $609 $706 $ 846 $ 1,015
Accounts Receivable $2,545 $3,095 $3,652 $ 4,365 $ 5,238
Inventories $1,630 $1,838 $2,190 $ 1,625 $ 3,153.60
Total current Assets $4,683 $5,542 $6,548 $ 6,836 $ 9,407
Liabilities
Current maturities of LT debt $125 $125 $125 $ 125 $ 125
Accounts Payable $1,042 $1,325 $1,440 $ 1,792 $ 2,150
Accrued Expenses $1,145 $1,432 $1,653 $ 1,986 $ 2,383
Total Current Liabilities $2,312 $2,882 $3,218 $ 3,903 $ 4,658
Sensitivity Analyses
$500.00 20%
$- 25%
5% 10% 15% 20% 25% 30% 35% 40%
$(500.00)
30%
$(1,000.00)
35%
$(1,500.00)
40%
Sales Growth
1996 1997
$12.00
$10.00
$ 13,000
$8.00
$ 14,000
$6.00 $ 15,000
$ 16,000
$4.00
$ 17,000
$2.00 $ 18,000
$ 19,000
$- $ 20,000
1500 1800 2100 2400 2700 3000 3300 3600
1996 1997
$ 21,000
$ 22,000
$ 23,000
Liquidity
Current Ratio 2.03 1.92 2.03
Quick Ratio 1.32 1.29 1.35
Asset Management
Days Accts. Pay. 40.33 40.65 38.61
DSO (Days in Rec) 57.24 55.50 56.71
Days in Inventory 36.66 32.96 34.01
CCC 53.56 47.81 52.11
Inventory Turnover 9.96 11.07 10.73
FA Turnover 8.56 8.93 9.65
Debt Management
Debt Ratio 0.50 0.48 0.44
TIE 12.14 18.16 23.50
Profitabiliy
Profit Margin 4.81% 4.90% 5.06%
ROA 11.85% 12.75% 13.25%
ROE 23.87% 24.53% 23.73%
Loan to Value
14.63% 41.62%
Amount & Sales Growth
1996 1997 Loan Amount vs. Sales Growth
$ 351 $ 999 $2,500.00
$ 334.59 $ 384.19
$2,000.00
$ 340.14 $ 577.62
$ 345.69 $ 782.56 $1,500.00
AFN
$ 367.88 $ 1,717.35 $-
5% 10% 15% 20% 25% 30% 35% 40%
$ 373.43 $ 1,979.81
Sales Growth
1996 1997
1996 1997
3 Year Avg Tax Growth
58.16% 10%
31.67% -3%
0.93% 3%
45.16%
3.04%
15.47%
9.46%
18.76%
6.35%
7.04%
1996 1997
1.75 2.02
1.34 1.34
39.87 39.87
56.48 56.48
21.03 34.01
37.64 50.62
17.36 10.73
6.68 7.89
0.38 0.41
30.38 28.26
5.16% 5.02%
13.16% 12.41%
21.39% 21.15%
LTV for sales growth at 30%
0.610997
35% 40%
00 00 00
1,0 2,0 3,0
$2 $2 $2
0 0 0
00 00 00
21, 22, 23,
$ $ $
$1,902 $(53)
Tire City Case
Assumptions
Historical 3 Yr Growth 20.00%
Capital Budget -1996 $2,000
Capital Budget 1997 $400
Total capital Budget-1996-1997 $2,400
Depreciation on Investment-1997 5.00%
Assumed Inventory-1996 $1,625
Implied Inventory/Sales-1996
Assumed Cash/Sales-1996-1997 3.00%
Historical Tax Rate
Tax Rate -1993 41.18%
Tax Rate 1994 45.19%
Tax Rate-1995 43.74%
Average Historical Tax Rate 43.37%
Historical Payouts
Payout-1993 19.87%
Payout-1994 20.06%
Payout-1995 20.17%
Average Payout 20.03%
Interest Rate on Loan 10.00%
50.00%
24.00%
10.00%
PM 5.06%
Sensitivity Analyses
1996 1997
$ 1,901.94 $ (52.81)
5% $ 1,877.87 $ 452.99
10% $ 1,885.89 $ 294.54
15% $ 1,893.92 $ 125.93
20% $ 1,901.94 $ (52.81)
25% $ 1,909.96 $ (241.71)
30% $ 1,917.99 $ (440.76)
35% $ 1,926.01 $ (649.95)
40% $ 1,934.03 $ (869.29)
1996 1997
$ 373 $ 1,010
$ 13,000 $ 373.37 $ 1,010.32
$ 14,000 $ 373.37 $ 1,010.32
$ 15,000 $ 373.37 $ 1,010.32
$ 16,000 $ 373.37 $ 1,010.32
$ 17,000 $ 373.37 $ 1,010.32
$ 18,000 $ 373.37 $ 1,010.32
$ 19,000 $ 373.37 $ 1,010.32
$ 20,000 $ 373.37 $ 1,010.32
$ 21,000 $ 373.37 $ 1,010.32
$ 22,000 $ 373.37 $ 1,010.32
$ 23,000 $ 373.37 $ 1,010.32
1996 1997
$ 373 $ 1,010
6000 $ 373.37 $ 1,010.32
7000 $ 373.37 $ 1,010.32
8000 $ 373.37 $ 1,010.32
9000 $ 373.37 $ 1,010.32
10000 $ 373.37 $ 1,010.32
11000 $ 373.37 $ 1,010.32
12000 $ 373.37 $ 1,010.32
13000 $ 373.37 $ 1,010.32
Tire City Case
Actual Projections
Income Statement 1993 1994 1995 1996 1997
Sales $16,230 $20,355 $23,505 $ 28,206 $ 33,847
Cost of Sales $9,430 $11,898 $13,612 $ 16,403 $ 19,684
Gross Profits $6,800 $8,457 $9,893 $ 11,803 $ 14,163
SGA $5,195 $6,352 $7,471 $ 8,932 $ 10,718
Depreciation $160 $180 $213 $213 $ 333
Net Interest Expense $119 $106 $94 $ 88 $ 112
Pre-Tax Income $1,326 $1,819 $2,115 $ 2,570 $ 3,000
Income Taxes $546 $822 $925 $ 1,114.70 $ 1,300.89
Net Income $780 $997 $1,190 $ 1,428 $ 1,714
Dividends $155 $200 $240 $ 286 $ 343
Addition to RE $625 $797 $950 $ 1,142 $ 1,370
Balance Sheet
Assets 1993 1994 1995 $ 1,996 $ 1,997
Surplus Cash $ - $ -
Cash $508 $609 $706 $ 846 $ 1,015
Accounts Receivable $2,545 $3,095 $3,652 $ 4,365 $ 5,238
Inventories $1,630 $1,838 $2,190 $ 1,625 $ 3,153.60
Total current Assets $4,683 $5,542 $6,548 $ 6,836 $ 9,407
Liabilities
Current maturities of LT debt $125 $125 $125 $ 125 $ 125
Accounts Payable $1,042 $1,325 $1,440 $ 1,792 $ 2,150
Accrued Expenses $1,145 $1,432 $1,653 $ 1,986 $ 2,383
Total Current Liabilities $2,312 $2,882 $3,218 $ 3,903 $ 4,658
Sensitivity Analyses
$2,000.00
$1,500.00
$1,000.00
$500.00
$-
5% 10% 15% 20% 25% 30% 35% 40%
1996 1997
Loan Amount vs. Inventory Assumptions
$1,200.00
$1,000.00
$800.00
$600.00
$400.00
$200.00
$-
1500 1800 2100 2400 2700 3000 3300 3600
1996 1997
$1,000.00
$800.00
$600.00
$400.00
$200.00
$-
0 0 0 0 0 0 0 0 0 0 0
00 00 00 00 00 00 00 00 00 00 00
13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23,
$ $ $ $ $ $ $ $ $ $ $
1996 1997
$1,000.00
$800.00
$600.00
$400.00
$200.00
$-
6000 7000 8000 9000 10000 11000 12000 13000
$800.00
$600.00
$400.00
$200.00
$-
6000 7000 8000 9000 10000 11000 12000 13000
1996 1997
Parameters 1993 1994 1995
COGS/Sales 58.10% 58.45% 57.91%
SGA/Sales 32.01% 31.21% 31.78%
Dep/Sales 0.99% 0.88% 0.91%
Liquidity
Current Ratio 2.03 1.92 2.03
Quick Ratio 1.32 1.29 1.35
Asset Management
Days Accts. Pay. 40.33 40.65 38.61
DSO (Days in Rec) 57.24 55.50 56.71
Days in Inventory 36.66 32.96 34.01
CCC 53.56 47.81 52.11
Inventory Turnover 9.96 11.07 10.73
FA Turnover 8.56 8.93 9.65
Debt Management
Debt Ratio 0.50 0.48 0.44
TIE 12.14 18.16 23.50
Profitabiliy
Profit Margin 4.81% 4.90% 5.06%
ROA 11.85% 12.75% 13.25%
ROE 23.87% 24.53% 23.73%
PM Sensitivity
$ 1,010
3% $ 2,033.89 $2,500.00
$2,000.00
$1,500.00
$1,000.00
$500.00
FN
$-
$2,500.00
4% $ 1,537.67 $2,000.00
5% $ 1,041.46 $1,500.00
$1,000.00
6% $ 545.24
$500.00
7% $ 49.02
AFN
$-
8% $ (447.20) 3%
$(500.00)
9% $ (943.42) $(1,000.00)
10% $ (1,439.64) $(1,500.00)
11% $ (1,935.86) $(2,000.00)
$(2,500.00)
LTV for 4% PM
64.07%
3 Year Avg Tax Growth
58.16% 10%
31.67% -3%
0.93% 3%
45.16%
3.04%
15.47%
9.46%
18.76%
6.35%
7.04%
1996 1997
1.75 2.02
1.34 1.34
39.87 39.87
56.48 56.48
21.03 34.01
37.64 50.62
17.36 10.73
6.68 7.89
0.39 0.41
30.38 27.70
5.06% 5.06%
12.91% 12.51%
21.06% 21.35%
PM Sensitivity
$2,500.00
$2,000.00
$1,500.00
$1,000.00
$500.00
FN
$-
PM Sensitivity
$2,500.00
$2,000.00
$1,500.00
$1,000.00
$500.00
AFN
$-
3% 4% 5% 6% 7% 8% 9% 10% 11%
$(500.00)
$(1,000.00)
$(1,500.00)
$(2,000.00)
$(2,500.00)
Profit Margin