MAIN MENU
README
Depreciation
effect
400
Period 1
3,000
8,100
11,100
1,600
3,300
5,600
10,500
1,620
3,555
5,925
11,100
900
8,900
1,380
9,480
Current liabilities
Long-term debt
Shareholders' equity
Liabilities and equity
Working capital
Capitalization
514
400
-480
434
Investing Activities:
Capital expenditures
Dis-investments
Cash (used in) investing activities
-750
250
-500
Financing Activities:
Debt proceeds (repayments)
Dividends paid
Stock proceeds (repurchase)
Cash from financing activites
580
Volume
1,000
Costs
(fixed & variable)
10,800
Dividends
Operating profit
after taxes
Interest
(tax adjusted)
309
720
206
Operations
Retained
earnings
206
Financing
Shareholders'
equity
5,925
Change in stock
119
Long-term debt
3,555
Change in debt
255
Funds surplus
(deficit)
-191
Funding
potential
389
Cash Flow
Uses
-1,000
-500
Sources
500
1,000
Capital expenditures
-750
Dis-investments
250
Working capital
-480
Income (cash basis)
914
255
255
-309
119
66
119
Dividends
-309
Investing
Change in cash
Cap. Expenditures
750
Investment change
Price
12
Investment
Dis-investment
250
Investment
base
8,900
309
206
Base Period
2,500
8,000
10,500
Cash Flow
The Business System
New
investment
1,230
Period 1
12,000
10,400
400
1,200
343
857
343
514
Dividends
Retained earnings
Balance Sheet
Current assets
Fixed assets
Assets
12
1,000
2,000
70%
5%
25%
15%
750
250
10%
40%
60%
60%
38%
Income Statement
Balance Sheet
Operating
Financing
Key Assumptions
Operations:
Price (per unit)
Volume (units)
Fixed costs
Variable costs - % sales
Investment:
Current assets - % sales
Current liabilities - % sales
Capital expenditures
Dis-investment
Depreciation % fixed assets
Financing:
Interest rate
Tax rate
Dividend payout
Debt/equity ratio - targeted
Debt as percent of capitalization
Income Statement
Sales
Costs
Depreciation
Operating profit (EBIT)
Interest
Profit before taxes
Taxes
Net income
Current liabilities
Long-term debt
Shareholders' equity
Liabilities and equity
25%
15%
750
250
5%
10%
40%
60%
60%
38%
Period 1
12,000
10,400
400
1,200
339
861
344
516
Dividends
Retained earnings
Balance Sheet
Current assets
Fixed assets
Assets
12
1,000
2,000
70%
EBIT
margin
10.0%
Operating decisions
Income tax
rate
40.0%
Operating
profit margin
6.0%
Working capital
turnover
10.0
Investment decisions
Fixed asset
turnover
1.5
Capital
turnover
1.3
Long-term
debt
3,488
Financing decisions
Payout/
retention
40.0%
Equity
5,813
Return on
investment
7.74%
Return on equity
(ROE)
8.88%
Debt proceeds
188
Leverage
proportions
60.0%
Stock proceeds
6
Ret. earnings
207
Net leverage
contribution
1.14%
Interest rate
after tax
5.84%
"Spread"
1.90%
310
207
Base Period
2,500
8,000
10,500
Period 1
3,000
8,100
11,100
1,600
3,300
5,600
10,500
1,800
3,488
5,813
11,100
900
8,900
1,200
9,300
Working capital
Capitalization
516
400
-300
616
Investing Activities:
Capital expenditures
Dis-investments
Cash (used in) investing activities
-750
250
-500
Financing Activities:
Debt proceeds (repayments)
Dividends paid
Stock proceeds (retirements)
Cash from financing activites
188
-310
6
-116
Change in cash
0
Modernsoft Inc., 1999
All rights reserved
Accounts Receivable
Inventory Analysis
Accrued Liabilities
KEY ASSUMPTIONS
Current sales and forecast
Current purchases and forecast
Terms: net (days)
Aug
1,925,000
Sep (e)
2,050,000
Oct
2,175,000
Nov
2,300,000
Dec
2,450,000
Jan
2,625,000
750,000
675,000
650,000
45
650,000
45
650,000
45
650,000
45
63
60
50
31
50
30
40
20
40
31
825,000
215,000
420,000
43,000
70.0%
15.0%
825,000
215,000
420,000
43,000
70.0%
15.0%
750,000
825,000
215,000
420,000
43,000
70.0%
14.0%
825,000
215,000
420,000
43,000
70.0%
14.0%
50.0%
50.0%
50.0%
300,000
25,000
375,000
50.0%
Oct
Nov
Dec
Jan
2,608
2,092
2,983
2,400
713
215
420
326
25
1,699
663
215
420
345
750
2,393
650
215
420
343
1,628
650
215
420
368
300
25
375
2,353
25,000
XYZ COMPANY
Cash Budget by Month
Six Months Ended March 31, 2002 ($000's)
Cash receipts:
Collections
Cash disbursements:
Payments for purchases
Wages
Other expenses
Selling and administrative expense
Note repayments
Interest payments
Dividend payments
Tax payments
Total disbursements
910
(301)
1,355
48
910
609
1,964
2,012
Dec
Jan
Days
60
60
Aug
642
642
Sep
-
Oct
-
Month of sale
Nov
Oct. 21-31
Nov. 1-10
Nov. 11-20
Nov. 21-30
Dec. 1-10
Dec. 11-20
Dec. 21-31
Jan. 1-10
Jan. 11-20
Jan. 21-31
Feb. 1-10
Feb. 11-20
Feb. 21-28
Mar. 1-10
Mar. 11-20
Mar. 21-31
50
50
50
50
50
40
40
40
40
40
40
40
40
40
40
40
642
-
683
683
683
-
725
725
725
-
767
767
767
-
817
817
817
-
875
875
875
-
August sales
September sales
Sept. 30, 2001
October sales
November sales
December sales
0.0%
33.3%
100.0%
0.0%
33.3%
100.0%
$000's
1,925
2,050
3,975
60
days
767
2,450
3,217
40
days
917
2,850
3,767
40
days
Raw materials:
Beginning balance (ending 9/30/01)
Purchases
Withdrawals
Ending balance
Finished goods:
Beginning balance (ending 9/30/01)
Materials
Wages
Other expenses
Depreciation
Cost of goods sold reported
Ending balance
3 month average
650 per mo.
825
per mo.
3 month average
825 per mo.
215 per mo.
420 per mo.
43 per mo.
12/31/2001
3/31/2002
2,725
1,950
4,675
2,475
2,200
2,725
3,900
6,625
4,950
1,675
6 month average
650
6,420
2,475
645
1,260
129
10,929
4,848
6,082
6,420
4,950
1,290
2,520
258
15,438
10,605
4,833
6 month average
825
215
420
43
825
12/31/2001
3/31/2002
2,875
75
494
3,444
3,444
2,875
150
1,171
4,196
300
375
3,521
XYZ COMPANY
Pro Forma Income Statements ($000's)
3 months ended
12/31/2001
6,925
4,848
2,078
1,014
75
988
494
494
6 months ended
3/31/2002
15,150
10,605
4,545
2,054
150
2,341
1,171
1,171
9/30/01 (e)
740
3,975
2,725
6,420
7,210
1,730
22,800
12/31/2001
2,704
3,217
2,200
6,082
7,081
1,730
23,013
3/31/2002
4,035
3,767
1,675
4,833
6,952
1,730
22,991
1,050
4,120
2,875
5,250
1,750
5,000
2,755
22,800
975
3,370
3,444
5,250
1,750
5,000
3,224
23,013
975
2,620
3,521
5,250
1,750
5,000
3,876
22,991
Sales
Cost of goods sold
Gross margin
Selling and administrative
Interest
Profit before taxes
Income taxes
Net income
XYZ COMPANY
Pro Forma Balance Sheets ($000's)
Cash
Accounts receivable
Raw materials
Finished goods
Plant and equipment (net)
Other assets
Total assets
Accounts payable
Notes payable
Accrued liability
Long-term debt
Preferred stock
Common stock
Retained earnings
Total liabilities
45
Collections calculation:
Lag
10
20
30
40
50
60
70
80
90
100
110
120
130
140
150
10
20
40
50
60
70
80
100
110
Aug. 1-10
Aug. 11-20
Aug. 21-31
Sep. 1-10
Sep. 11-20
Sep. 21-30
Oct. 1-10
Oct. 11-20
Oct. 21-31
Nov. 1-10
Nov. 11-20
Nov. 21-30
Dec. 1-10
Dec. 11-20
Dec. 21-31
641,667
641,667
641,667
683,333
683,333
683,333
725,000
725,000
725,000
766,667
766,667
766,667
816,667
816,667
816,667
641.7
641.7
641.7
683.3
683.3
683.3
725.0
725.0
725.0
766.7
766.7
766.7
816.7
816.7
816.7
Collectx
Change
Date
60.0
60.0
60.0
50.0
50.0
50.0
50.0
50.0
50.0
40.0
40.0
40.0
31
31
31
30
30
30
20
20
20
10
20
31
10
20
31
10
20
31
160
170
180
190
200
210
220
230
240
250
260
270
280
290
120
130
140
150
160
170
180
190
200
250
260
270
280
Jan. 1-10
Jan. 11-20
Jan. 21-31
Feb. 1-10
Feb. 11-20
Feb. 21-28
Mar. 1-10
Mar. 11-20
Mar. 21-31
875,000
875,000
875,000
916,667
916,667
916,667
950,000
950,000
950,000
875.0
875.0
875.0
916.7
916.7
916.7
950.0
950.0
950.0
40.0
40.0
40.0
40.0
40.0
40.0
40.0
40.0
40.0
31
31
31
28
28
28
31
31
31
10
20
31
10
20
31
10
20
31
Lag 2
40
100
-
Lag 3
-
Lag 4
-
10
20
30
40
50
60
70
80
90
100
110
120
130
140
150
160
170
180
190
160
200
170
210
180
180
220
10
190
190
230
10
200
200
240
30
60
90
120
150
Aug
Sep (e)
Oct
Nov
Dec
Jan
Feb
750,000
675,000
650,000
650,000
650,000
650,000
650,000
10
10
20
10
10
10
10
20
10
10
10
10
10
Lag Calc
10
20
30
50
60
70
80
90
110
120
130
140
150
Lag 1
10
20
30
50
60
70
80
90
110
120
130
140
150
160
10
160
170
10
170
180
10
190
200
Payment of purchases
July (e)
750,000
Diff
payment
1
Terms:
15
30
45
2
0.5000
3
1
0.5000
1.0000
0.5000
180
45
45
45
45
45
712,500
662,500
650,000
650,000
650,000
4
2
5
3
0.5000
vlookup
Month lag
15
60
90
1.0000
1
Feb
2,750,000
Mar
2,850,000
650,000
45
650,000
45
40
28
40
31
825,000
215,000
420,000
43,000
70.0%
12.0%
750,000
825,000
215,000
420,000
43,000
70.0%
12.0%
50.0%
50.0%
Feb
Mar
Total
2,567
2,708
15,358
650
215
420
330
750
2,365
650
215
420
342
1,627
3,975
1,290
2,520
2,054
1,500
300
50
375
12,064
202
1,081
3,295
2,213
3,295
Feb
Totals:
15,358
2,608
2,092
2,983
2,400
917
917
6 month average
per mo.
per mo.
6 month average
per mo.
per mo.
per mo.
per mo.
2,567
2,708
300
677
days
Change?
1
1
1
-
Collect
60
60
60
60
60
50
50
50
50
50
40
40
Oct. 1-10
Oct. 11-20
Oct. 21-31
Nov. 1-10
Nov. 11-20
Nov. 21-30
Dec. 1-10
Dec. 11-20
Dec. 21-31
Aug
642
642
642
-
Sep
683
683
683
-
Oct
725
725
725
-
Nov
767
767
Dec
Jan
Feb
40
40
40
40
40
40
40
40
40
Jan. 1-10
Jan. 11-20
Jan. 21-31
Feb. 1-10
Feb. 11-20
Feb. 21-28
Mar. 1-10
Mar. 11-20
Mar. 21-31
10
642
Aug. 1-10
20
642
Aug. 11-20
30
642
Aug. 21-31
40
683
Sep. 1-10
Feb. 1-10
641.7
-
641.7
-
641.7
-
Feb. 11-20
Feb. 21-28
Mar. 1-10
Mar. 11-20
Mar. 21-31
1
1
1
Sales:
767
-
817
817
817
-
875
875
875
-
917
917
50
683
Sep. 11-20
60
683
Sep. 21-30
70
725
Oct. 1-10
80
725
Oct. 11-20
90
725
Oct. 21-31
683.3
-
683.3
-
683.3
-
725.0
-
725.0
-
725.0
-
Aug. 1-10
Aug. 11-20
Aug. 21-31
Sep. 1-10
Sep. 11-20
Sep. 21-30
Oct. 1-10
Oct. 11-20
Oct. 21-31
Nov. 1-10
Nov. 11-20
Nov. 21-30
Dec. 1-10
Dec. 11-20
Dec. 21-31
Jan. 1-10
Jan. 11-20
Jan. 21-31
210
Mar
650,000
45
650,000
Purchases
Terms
100
767
Nov. 1-10
110
767
Nov. 11-20
120
767
Nov. 21-30
130
817
Dec. 1-10
140
817
Dec. 11-20
150
817
Dec. 21-31
160
875
Jan. 1-10
766.7
-
766.7
-
766.7
-
816.7
-
816.7
-
816.7
170
875
Jan. 11-20
180
875
Jan. 21-31
190
917
Feb. 1-10
875.0
875.0
875.0
916.7
200
917
Feb. 11-20
210
917
Feb. 21-28
220
950
Mar. 1-10
230
950
Mar. 11-20
240
950
Mar. 21-31
916.7
Key Assumptions
Contribution per unit
Revenue
Variable costs
Contribution
Fixed costs
Break-even volume
Profits and losses as a function of volume changes of
750
250
500
200
400
25.0%
Increase
Volume
400
300
225
169
127
95
25.0%
Increase
25.0%
25.0%
25.0%
25.0%
25.0%
Profits
50,000
112,500
190,625
288,281
410,352
Decrease
25.0%
25.0%
25.0%
25.0%
25.0%
25.0%
Losses
50,000
87,500
115,625
136,719
152,539
Decrease
125%
69%
51%
42%
75%
32%
18%
12%
1,000
900
$ Thousands
800
700
600
500
400
300
200
200
100
0
100
200
300
400
500
600
700
800
900
1000
1100
1200
Total revenue
Variable costs
Fixed costs
1200
Volume
Volume
0
100
200
300
400
500
600
700
800
900
1000
1100
1200
Revenue
75
150
225
300
375
450
525
600
675
750
825
900
Variable
200
225
250
275
300
325
350
375
400
425
450
475
500
Fixed
200
200
200
200
200
200
200
200
200
200
200
200
200
Financing:
Additional debt
Funding potential
40.0
80.0
40.0
25.0
65.0
65.0
40.0
105.0
Results:
Net return on net assets
Return on equity
Growth in equity
8.0%
16.0%
16.0%
Income Statement
Sales
Costs
Depreciation
Operating profit
Interest
Income before taxes
Taxes
Net income
ROC
10.0%
x
Retention rate
100.0%
10.0%
50.0
6.0%
33.3%
4.0%
10.0
40.0
0.0%
40.0
16.0%
Depreciation
effect
25
200.0%
x
Retention rate
100.0%
Dis-investment
Investment base
Current liabilities
Long-term debt
Shareholders' equity
Liabilities and equity
250
250
500
290
290
580
Working capital
Capitalization
500
580
40
25
Investment change
Cap. Expenditures
Price
Volume
Costs
Operations
Dividends
Operating profit
after taxes
50
Interest
(tax-adjusted)
10
Retained
earnings
Financing
40
Shareholders'
equity
290
Change in stock
0
Long-term debt
Funds surplus
(deficit)
0
Funding potential
290
Change in debt
40
80
Cash Flow
Uses
-150
-100
-50
Sources
0
50
100
65
-105
Financing Activities:
Debt proceeds (repayments)
Dividends paid
Stock proceeds (repurchase)
Cash from financing activites
Investment
#REF!
80
Period 1
580
Investing Activities:
Capital expenditures
Dis-investments
Cash (used in) investing activities
Financial leverage
500
500
Sustainable
growth rate
0
40
Period 0
Debt to equity
100.0%
x
( ROC - i )
6.0%
x
Retention rate
100.0%
ROS
20.0%
x
Sales / assets
40.0%
x
New
investment
105
Period 1
200
100
25
75
15
60
20
40
Dividends
Retained earnings
50.0%
100.0%
250.0
250.0
500.0
Disposition of profit:
Dividend payout
Dividends paid
Reinvestment of profit
Balance Sheet
Current assets
Fixed assets
Assets
Results
Income Statement
Balance Sheet
Cash Flow Statement
500.0
50.0%
10.0%
6.0%
33.3%
0.0%
Investment potential
-105
65
-105
40
Debt
40
0
0
40
0
0
0
Stock
0
Investing
Operating
Dividends
Financing
Case I
Capital structure
Disposition of profit
Results
Case II
Case III
500.0
500.0
500.0
0.0%
50.0%
50.0%
10.0%
10.0%
10.0%
0.00%
6.00%
6.00%
Tax rate
33.3%
33.3%
33.3%
Dividend payout
0.0%
0.0%
50.0%
Depreciation effect
25.0
25.0
25.0
Capital structure:
Case I
Case II
Case III
Case IV
500.0
Case IV
Case V
500.0
Case V
Case VI
500.0
Case VI
Case VII
500.0
Case VII
0.0%
50.0%
50.0%
0.0%
0.0%
0.0%
0.0%
0.0%
100.0%
100.0%
0.0%
0.0%
0.0%
0.0%
250.0
250.0
500.0
250.0
250.0
500.0
500.0
500.0
500.0
500.0
500.0
500.0
500.0
500.0
500.0
500.0
10.0%
10.0%
10.0%
0.0%
0.0%
0.0%
0.0%
50.0
50.0
50.0
0.00%
6.00%
6.00%
0.00%
0.00%
0.00%
0.00%
Tax rate
33.3%
33.3%
33.3%
0.0%
0.0%
0.0%
0.0%
0.00%
4.00%
4.00%
0.00%
0.00%
0.00%
0.00%
Debt
Equity
Net assets (capitalization)
Profitability (after taxes):
Gross return on net assets
Amount of profit
10.0
10.0
50.0
40.0
40.0
0.0%
0.0%
50.0%
0.0%
20.0
40.0
20.0
Disposition of profit:
Dividend payout
Dividends paid
Reinvestment of profit
50.0
0.0%
0.0%
0.0%
Financing:
Additional debt
40.0
20.0
50.0
80.0
40.0
50.0
40.0
40.0
Depreciation effect
25.0
25.0
25.0
75.0
65.0
65.0
20.0
65.0
45.0
40.0
20.0
105.0
65.0
Funding potential
Dividends paid
Cash flow available for reinvestment
Additional debt
Total investment potential
75.0
75.0
Results:
Net return on net assets
10.0%
8.0%
8.0%
0.0%
0.0%
0.0%
0.0%
Return on equity
10.0%
16.0%
16.0%
0.0%
0.0%
0.0%
0.0%
Growth in equity
10.0%
16.0%
8.0%
0.0%
0.0%
0.0%
0.0%
Capital structure
Disposition of profit
Results
($ thousands)
POLICY ASSUMPTION INPUTS:
Year 1
Year 2
Year 3
Year 4
Year 5
900.0
33.3%
43.0%
43.0%
50.0%
50.0%
8.0%
7.0%
8.0%
8.0%
9.0%
6.00%
6.00%
6.00%
6.75%
6.75%
Tax rate
33.3%
33.3%
33.3%
33.3%
33.3%
Dividend payout
60.0%
50.0%
50.0%
50.0%
40.0%
40.0
46.0
50.0
65.0
72.0
Depreciation effect
Year 6
50.0%
($ thousands)
Capital structure:
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
33.3%
43.0%
43.0%
50.0%
50.0%
50.0%
50.0%
75.4%
75.4%
100.0%
100.0%
100.0%
Debt
300.0
470.7
492.5
688.9
728.5
787.5
Equity
600.0
624.0
652.9
688.9
728.5
787.5
900.0
1,094.7
1,145.4
1,377.7
1,457.0
1,575.0
Year 1
8.0%
Year 2
7.0%
Year 3
8.0%
Year 4
8.0%
Year 5
9.0%
Year 6
0.0%
72.0
76.6
91.6
110.2
131.1
6.00%
6.00%
6.00%
6.75%
6.75%
0.00%
Tax rate
33.3%
33.3%
33.3%
33.3%
33.3%
0.0%
4.00%
4.00%
4.00%
4.50%
4.50%
0.00%
12.0
18.8
19.7
31.0
32.8
60.0
57.8
71.9
79.2
98.3
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
60.0%
50.0%
50.0%
50.0%
40.0%
36.0
28.9
36.0
39.6
39.3
24.0
28.9
36.0
39.6
59.0
Year 1
Year 2
Year 3
Year 4
Year 5
0.0%
Year 6
12.0
21.8
27.1
39.6
59.0
158.7
169.2
(787.5)
Funding potential
194.7
50.7
232.3
79.2
118.0
(787.5)
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
60.0
57.8
71.9
79.2
98.3
Depreciation effect
40.0
46.0
50.0
65.0
72.0
100.0
103.8
121.9
144.2
170.3
Dividends paid
36.0
28.9
36.0
39.6
39.3
64.0
74.9
86.0
104.6
131.0
170.7
21.8
196.3
39.6
59.0
(787.5)
234.7
96.7
282.3
144.2
190.0
(787.5)
Additional debt
Total investment potential
Results:
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
6.7%
5.3%
6.3%
5.8%
6.8%
0.0%
Return on equity
10.0%
9.3%
11.0%
11.5%
13.5%
0.0%
Growth in equity
4.0%
4.6%
5.5%
5.8%
8.1%
0.0%
0.60
0.58
0.72
0.79
0.98
0.36
0.29
0.36
0.40
0.39
100,000
TOTALS
-10,500
Annual benefits
Depreciation
36.0%
PV Factor
14.0%
TOTALS
10
10
1,000
4,000
4,000
4,000
4,000
4,000
4,000
4,000
1,500
1,500
1,500
1,500
1,500
1,500
1,500
36%
36%
36%
36%
36%
36%
36%
36%
36%
36%
2,560
2,560
2,560
2,560
2,560
2,560
2,560
3,780
540
540
540
540
540
540
540
11,200
PV Factor @ 14%
Present value of investment cash flows
17,920
-11,500
28,000
Tax rate
-11,100
-11,500
3,100
3,100
3,100
3,100
3,100
3,100
4,100
1.000
0.877
0.769
0.675
0.592
0.519
0.456
0.400
0.351
0.308
0.270
-11,500
400
2,719
2,385
2,092
1,835
1,610
1,412
1,239
-11,500
2,719
2,385
2,092
1,835
1,610
1,412
1,639
-11,500
-8,781
-6,395
-4,303
-2,467
-857
555
2,193
2,193
2,193
2,193
13,294
2,193
1.20
19.9%
6 Year *
8000
Balance Sheet
Operations:
Original
New
7.00
7,999
2,000
Investment:
6.00
Current assets
15,000
29,000
Other assets
1,000
Current liabilities
7,000
5.00
Financing:
4.00
10,000
Tax rate
34.0%
34.0%
Interest rate
11.5%
12.5%
2.50
2.50
36.36
1,000
$
10.00
Cost of capital
Retained earnings
1,275
13.25%
Current assets
15,000
Fixed assets
29,000
Other assets
1,000
Assets
45,000
2.50
2.00
1.00
0.00
0.00
2.00
7,000
Long-term debt
Preferred stock
Common stock
10,000
Retained earnings
28,000
3.00
28,000
Current liabilities
5.28
45,000
ABC CORPORATION
Recap of EPS Analyses with new Product ($000's)
New Financing of $10 Million
Original
Earnings before interest and taxes (EBIT)
Debt
Preferred
Common
7,999
9,999
9,999
9,999
1,150
7,999
8,849
9,999
9,999
2,720
3,009
3,400
3,400
5,279
5,840
6,599
6,599
1,250
5,279
5,840
5,349
6,599
1,000
1,000
1,000
1,275
5.28
5.84
5.35
5.18
2.50
2.50
2.50
2.50
2.78
3.34
2.85
2,779
2.68
3,340
2,849
3,412
-21.6%
-14.4%
-23.7%
10.6%
1.3%
-2.0%
Specific cost
7.59%
12.50%
13.25%
ABC CORPORATION
Zero EPS Calculation ($000's)
New Financing of $1 Million
Original
Earnings per share (EPS)
Debt
Preferred
Common
1,000
1,000
1,000
1,275
Preferred dividends
1,250
1,250
644
1,894
1,150
1,150
1,894
ABC CORPORATION
Earnings per Share Calculation - Original ($000's)
ABC CORPORATION
Earnings per Share with New Bond Issue ($0
Original
Earnings before interest and taxes (EBIT)
7,999
7,999
2,720
5,279
5,279
1,000
5.28
2.50
2.78
2,779
ABC CORPORATION
Earnings per Share with New Preferred Stock Issue ($000's)
ABC CORPORATION
Earnings per Share with New Common Stoc
Before New
With New
Product
Product
7,999
9,999
7,999
9,999
2,720
3,400
5,279
6,599
1,250
1,250
4,029
5,349
1,000
Change in EPS
Percent change in EPS
1,000
4.03
5.35
2.50
2.50
1.53
2.85
1,529
2,849
5.28
5.28
Original EPS
-$
1.25
0.07
Change in EPS
1.3%
-23.7%
4.53
2.75
Original
Bonds
Preferred
Common
Orig. EPS
Div/Sh
4.00
6.00
EBIT ($millions)
8.00
10.00
E(1-t)/s
(E-i)(1-t)/s
(E(1-t)-d)/s
E(1-t)/s
12.00
With New
Product
Product
7,999
9,999
1,150
1,150
6,849
8,849
2,329
3,009
4,520
5,840
outstanding (000's)
4,520
5,840
1,000
1,000
4.52
5.84
2.50
2.50
2.02
2,020
3.34
3,340
5.28
-$
0.76
-14.4%
5.28
0.56
10.6%
Before New
With New
Product
Product
7,999
9,999
outstanding (000's)
7,999
9,999
2,720
3,400
5,279
6,599
5,279
6,599
1,275
1,275
4.14
5.18
2.50
2.50
1.64
2,092
2.68
3,412
5.28
5.28
-$
1.14
-$
0.10
-21.6%
-2.0%
E - i)(1 - t) - d]/s
erred dividends $
es outstanding
8.76
5.78
5.02
4.53
4.53
5.28 $
2.50 $
11.00
7.26
6.50
6.01
5.69
5.28
2.50
Year: 0
10,000
12,000
13,000
12,000
13,500
12,500
6,500
7,000
8,600
9,300
9,900
11,900
-1,200
-1,400
-1,800
500
-1,600
-2,000
-8,000
-15,000
-10,200
-11,000
-22,000
-10,000
500
-300
400
1,200
-800
7,800
2,300
10,000
12,000
-1,000
12,400
EBIT x (1 - t)
Add: write-offs and non-cash items
187,500
Ongoing value
0.893
0.797
0.712
0.636
0.567
0.507
0.452
0.404
0.361
6,964
1,834
7,118
7,626
-567
6,282
94,993
6,964
8,798
15,916
23,542
22,974
124,250
124,250
124,250
124,250
12.0%
124,250
Firm value
124,250
Non-operating assets
Total value
Value of long-term debt outstanding
Value of company equity
5,700
129,950
40,000
89,950
Chapter 11: An Illustration of Economic Profit, CFROI, and Earnings Measures ($000's)
Key Assumptions
Working capital - initial
Fixed investment - initial
Economic life
Cost of capital
Net present value factor
NOPAT
Capital amortization
Depreciation effect
Economic Profit Analysis
Book value of fixed investment (beg.)
Working capital
Total book value
Cost of capital
Capital charge @ 10%
NOPAT
Economic profit (EVA)
Present value factor @ 10%
Net PV of economic profits @ 10%
1.000
0
12,000
-12,000
12,000
0
Other Measures
ROE
ROCE / RONA
ROGI
CFROI
Project/business IRR
Cost of capital
Accounting ROA
Accounting ROGI
2
8,750
2,000
10,750
10.0%
1,075
824
-251
0.826
-207
3
7,500
2,000
9,500
10.0%
950
824
-126
0.751
-94
4
6,250
2,000
8,250
10.0%
825
824
-1
0.683
0
5
5,000
2,000
7,000
10.0%
700
824
124
0.621
77
1
824
1,250
2,074
2
824
1,250
2,074
3
824
1,250
2,074
4
824
1,250
2,074
5
824
1,250
2,074
12,000
10.0%
1,200
874
0
2,074
1,886
12,000
10.0%
1,200
874
0
2,074
1,714
12,000
10.0%
1,200
874
0
2,074
1,559
12,000
10.0%
1,200
874
0
2,074
1,417
12,000
10.0%
1,200
874
0
2,074
1,288
1
6.9%
6.9%
17.3%
10.0%
2
7.7%
7.7%
17.3%
10.0%
3
8.7%
8.7%
17.3%
10.0%
4
10.0%
10.0%
17.3%
10.0%
5
11.8%
11.8%
17.3%
10.0%
30.0%
25.0%
20.0%
Rate of return
20.0%
15.0%
10.0%
5.0%
6.9%
0.0%
1
5
Year
Graph Data
Project/business IRR
Cost of capital
Accounting ROA
Accounting ROGI
1
10.0%
10.0%
6.9%
17.3%
2
10.0%
10.0%
7.7%
17.3%
3
10.0%
10.0%
8.7%
17.3%
4
10.0%
10.0%
10.0%
17.3%
5
10.0%
10.0%
11.8%
17.3%
6
10.0%
10.0%
14.3%
17.3%
7
2,500
2,000
4,500
10.0%
450
824
374
0.513
192
8
1,250
2,000
3,250
10.0%
325
824
499
0.467
233
10
11
12
13
14
0
0
0
0.0%
0
0
0
0
0
0
0
0.0%
0
0
0
0
0
0
0
0.0%
0
0
0
0
0
0
0
0.0%
0
0
0
0
0
0
0
0.0%
0
0
0
0
0
0
0
0.0%
0
0
0
0
6
824
1,250
2,074
7
824
1,250
2,074
8
824
1,250
2,074
10
11
12
13
14
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
12,000
10.0%
1,200
874
0
2,074
1,171
12,000
10.0%
1,200
874
0
2,074
1,065
12,000
10.0%
1,200
874
2,000
4,074
1,901
0
0.0%
0
0
0
0
0
0
0.0%
0
0
0
0
0
0
0.0%
0
0
0
0
0
0
0.0%
0
0
0
0
0
0
0.0%
0
0
0
0
0
0
0.0%
0
0
0
0
0
6
14.3%
14.3%
17.3%
10.0%
7
18.3%
18.3%
17.3%
10.0%
8
25.4%
25.4%
17.3%
10.0%
10
11
12
13
14
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
17.3%
10.0%
10.0%
7
10.0%
10.0%
18.3%
17.3%
8
10.0%
10.0%
25.4%
17.3%
15
0
0
0
0.0%
0
0
0
0
15
0
0
0
0
0.0%
0
0
0
0
0
15
0.0%
0.0%
0.0%
0.0%
Sample Template
START HERE
(Try me!)
Key Assumptions
Sales
500.0
40.0%
Click to view
graph / table
Click here to access MAIN MENU. From there you can go
to any worksheet by simply clicking on the appropriate
button. Alternatively, click on tabs below at any time for
direct access to any worksheet / template.
Sales
500.0
Costs
Costs
200.0
Income
Income
300.0
600.0
500.0
400.0
Sales
300.0
Costs
200.0
Income
100.0
Zoom in/out with different magnifications to optimize view for your screen.
Use split screen and freeze panes commands to view multiple panels.
Open new window to view multiple windows simultaneously.
SENSITIVITY
ANALYSIS
To quickly view the results of changing one input, first enter new value in Assumptions
section for input. Go to table / chart / graph to observe resultant change. Now use the
undo and redo buttons on your toolbar, alternatively, to see before and after impact.
MODIFYING
TEMPLATES
If you're an experienced Excel user, if you wish you can easily modify and customize
the template(s) for your own use. Simply unprotect the worksheet. However, be
careful not to violate the financial integrity of the interrelationships. (P.S. If you
mess up, don't worry. Simply retrieve the original templates from your program disk.)
Note:
Some of the graphics may not appear correctly on your screen. This is NOT a problem
with your computer/screen or the template. These templates are optimized for
a screen resolution of 1024 x 768.