Financial Modeling

Group Assignment #1 - Hampton Machine Tools

9/13/2018
Version #1.2
Legend

Team Members Cell Text Colors

Trevor Chasse XX Inputs
Jacob Cowan XX Linked Inputs
Brett Harper XX Formulas

Model Purpose
Our model provides the user with financial statements linked to inputs that can be Cell Types
used to determine the optimal course to avoid financial difficulty in the repayment Headers
of loans.
Subheaders
Instructions
Odd Input Cell
Even Input Cell
Check Value
Notes on Using This Model
1. You may change any value on the input tab.
2. Please do not change black formula cells
3. Raw Materials Inventory has been evenly expensed to 0 by Year End. Excess
Work in Progress was completed and shipped in the following month.
Hampton Machine Tool

Hampton Machine Tool

Trevor Chasse, Jacob Cowan, Brett Harper
September October
Sales and Expense Projections
Overall Shipment Estimates 2163 1505
Sales excluding advances 1323 665
Sales against customer advances 840 840
Purchases 600 600
Inventory Changes -1425 -105
Other Expenses 400 400
Tax Payments 181 0
Prepaid Expenses 42 42

Capital Expenditures
New Machine Cost 350
Purchase Timing October
Tax Credit Percentage 10%
Tax Credit (Same timing as purchase) 35

Current Accout Policies

Payables Term 60
Receivables Term 30

Depreciation Assumptions
Depreciation on existing assets 10
New asset useful life 8

Other Items
Tax Rate 48%
Growth Rate of Prepaids and Accruals 0%
Interest Rate 1.5%

Dividend
Month December
Dividend Amount 150
Zero Dividend 0

Sales Schedule Remainder:

Customer Advance 1566 726 0
October 726
November 0
December 0
Hampton Machine Tool

Scheduled Shipments:
September 840
October 840
November 420
Overall Shipment Estimates:
September 2163
October 1505
November 1604
December 2265

Inventory
Excess Work in Progress 1320 1320
Extra Raw Materials Inventory 420 105 105

Outstanding Note
Loan Outstanding 1000
New Loan 350
New Loan Start October
Repayment Date January

30
60
August
September
October
November
December
January
Hampton Machine Tool

November December January

1604 2265
1184 2265 2000
420 0 0
600 600 600
-105 -105 0
400 400 400
0 181 0
42 42 42

0 0 0
Hampton Machine Tool

105 105 0
Hampton Machine Tool
Trevor Chasse, Jacob Cowan, Brett Harper
August September October
4 Month Income Statement
Sales against customer advances 840 840
Other Sales 1323 665
Sales on Credit 1323 779
Sales 2163 1505
Cost of Sales
Change in Inventories 1425 105
-Purchases 600 600
Total Cost of Sales 2025 705
Depreciation 10 10
Other Expense 400 400
Interest 15 15
Profits Before Tax -287 375
Taxes -138 143
Net Income -149 233
Dividends 0 0
Retained Earnings -149 233

Balance Sheets
Cash 1559 1647 1607
Accounts Rceivable, net 684 1323 779
Inventories 4764 3339 3234
Current Assets 7007 6309 5620
Gross Fixed Assets 4010 4010 4360
Accumulated Depreciation -3090 -3100 -3110
Net Fixed Assets 920 910 1250
Prepaid Expenses 42 42 42
Total Assets 7969 7261 6912

Notes Payable, Bank 1000 1000 1350

Accounts Payable 948 1548 1200
Accruals 552 552 552
Taxes Payable 479 160 303
Customer Advance Payments 1566 726 0
Current Liabilities 4545 3986 3405
Common Stock 428 428 428
Surplus 2996 2847 3079
Net Worth 3424 3275 3507
Total Liabilities and Net Worth 7969 7261 6912
Balance? 1 1 1
Statement of Cashflows
Cash Flows from Activities
Net Income -149 233
Adjustments to Net Income for Cash Flow
Depreciation 10 10
Change in Accounts Receivable -639 544
Change in Inventories 1425 105
Change in Prepaids 0 0
Change in Accounts Payable 600 -348
Change in Accruals 0 0
Change in Taxes Payable -319 143
Change in Customer Advances -840 -726
Total Cash Flowsfrom Operations 88 -40

Cash Flows from Investing

Capital Expenditures (ChangeNFA + Depr.) 0 -350
Total Cash Flows from Investing 0 -350

Cash Flows from Financing

Equity Issues - Dividends 0 0
Change in Debt Principal 0 350
Total Cash Flows from Financing 0 350

Beginning Cash 1559 1647

Ending Cash 88 -40
Change in Cash 1647 1607
Cash Balances? 1 1
November December January

420 0 0
1184 2265 2000
1604 2265 2000
1604 2265 2000

105 105 0
600 600 600
705 705 600
14 14 14
400 400 400
20 20 20
465 1126 966
223 541 464
242 586 502
0 150 0
242 436 502

1366 1619 1513

1604 2265 2000
3129 3024 3024
6099 6908 6537
4360 4360 4360
-3124 -3137 -3151
1236 1223 1209
42 42 42
7377 8172 7788

1350 1350 0
1200 1200 1200
552 552 552
526 886 1349
0 0 0
3628 3988 3101
428 428 428
3321 3757 4259
3749 4185 4687
7377 8172 7788
 1 1 1

242 586 502

14 14 14
-825 -661 265
105 105 0
0 0 0
0 0 0
0 0 0
223 360 464
0 0 0
-241 403 1245

0 0 0
0 0 0

0 -150 0
0 0 -1350
0 -150 -1350

1607 1366 1619

-241 253 -105
1366 1619 1513
1 1.00 1
Hampton Machine Tool
Trevor Chasse, Jacob Cowan, Brett Harper
Dear Mr. Cowins,

Our team has created a financial model to help advise you about the financial health of your company. We have assu
that your entire excess work in progress inventory was used up in the month of September as the products were com
and shipped. Additionally, we assumed that the excess raw materials would be evenly depleted over the following fo
month period. Our model reveals that your company will endure financial distress in December with your current
receivables and payables term of 30 days. If both terms stay at 30 days, you will realize a negative cash balance in
December of -$331,000. However, if the terms were reworked with the supplier to allow for 60 days for payables, th
December cash balance will be $269,000. If details were negotiated to extend the repayment of both loans an additi
month it would significantly strengthen cash balances in every month and would offset the extra month of interest y
would pay.
nancial health of your company. We have assumed
month of September as the products were completed
ould be evenly depleted over the following four
cial distress in December with your current
you will realize a negative cash balance in
supplier to allow for 60 days for payables, the
extend the repayment of both loans an additional
nd would offset the extra month of interest you