Use the following information about XYZ Plumbing (FY=12/31), a public company with the most recent closing stock price of $5.00, to answer the following three problems
|
Income Statement
|
2013
|
2014
|
|
Revenue
|
10,000,000
|
12,000,000
|
|
CGS
|
4,000,000
|
4,800,000
|
|
Gross Profit
|
6,000,000
|
7,200,000
|
|
SG&A
|
1,800,000
|
2,000,000
|
|
R&D
|
1,000,000
|
1,000,000
|
|
Deprec & Amort
|
500,000
|
550,000
|
|
Total Op. Expense
|
3,300,000
|
3,550,000
|
|
Operating Profit
|
2,700,000
|
3,650,000
|
|
Interest cost
|
520,000
|
600,000
|
|
Interest income
|
90,000
|
110,000
|
|
Pre-Tax
|
2,270,000
|
3,160,000
|
|
Tax (35% rate)
|
794,500
|
1,106,000
|
|
Net Income
|
1,475,500
|
2,054,000
|
|
EPS - Basic
|
0.15
|
0.21
|
|
Average Shares Outstanding
|
10,000,000
|
10,000,000
|
Balance Sheet
|
ASSETS
|
2013
|
2014
|
LIABILITIES
|
2013
|
2014
|
|
Cash
|
2,500,000
|
4,154,000
|
Accounts Payable
|
500,000
|
500,000
|
|
A/R
|
1,000,000
|
1,500,000
|
Notes Payable
|
1,500,000
|
1,000,000
|
|
Inventory
|
2,000,000
|
2,300,000
|
Current portion of LTD
|
1,000,000
|
1,000,000
|
|
Pre-paid expenses
|
1,000,000
|
670,000
|
Accrued Liabilities
|
500,000
|
520,000
|
|
Total Current Assets
|
6,500,000
|
8,624,000
|
Total Current Liabilities
|
3,500,000
|
3,020,000
|
|
Building and Improvements
|
15,000,000
|
15,000,000
|
Long-Term Debt
|
12,000,000
|
14,000,000
|
|
Equipment
|
5,000,000
|
7,000,000
|
|
|
|
|
|
20,000,000
|
22,000,000
|
Stockholder's Equity
|
|
|
|
|
|
|
Common Stock at Par
|
100,000
|
100,000
|
|
Depreciation
|
500,000
|
1,050,000
|
Paid in Capital
|
9,900,000
|
9,900,000
|
|
Net PP&E
|
19,500,000
|
20,950,000
|
Retained Earnings
|
500,000
|
2,554,000
|
|
|
|
|
Total Stockholder's Equity
|
10,500,000
|
12,554,000
|
|
Total Assets
|
26,000,000
|
29,574,000
|
Total Liabilities + Equity
|
26,000,000
|
29,574,000
|
1. Complete the following cash Flow Statement for XYZ Plumbing for 2014
2. Calculate the following ratios for XYZ Plumbing 2014:
3. Fill in the projections for XYZ Plumbing for 2015, based on the following assumptions:
1. Revenue grows by 25% between 2014 and 2015.
2. Gross Margins remain at 2014 levels.
3. SG&A improves by 1% (as a % of revenue)
4. R&D increases by 20%.
5. Depreciation and Amortization costs do not change between 2014 and 2015.
6. Interest costs and expenses are given in the table below.
7. The tax rate remains constant.
8. The Average Shares Outstanding is the same as it was in 2014.
9. Options and Warrants are listed in the following table:
| Options |
Amount |
Exercise Price |
Public Warrants |
Amount |
Exercise Price |
| Officers and Directors |
2,000,000 |
$2.00 |
Shareholders |
4,000,000 |
$3.00 |