excel solutions - cases

8/4/2019 Excel Solutions - Cases

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Case SolutionsCases 1,2,4,5,7

Input boxes in tan

Output boxes in yellow

Given data in blue

Calculations in red

Answers in green


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Input area:

2004 2005

Cost of goods sold 84,310$ 106,450$Cash 12,165 18,380Depreciation 23,800 26,900Interest expense 5,180 5,930Selling & Administrative 16,580 21,640Accounts payable 21,500 24,350Fixed assets 105,000 134,000Sales 165,390 201,600Accounts receivable 8,620 11,182Notes payable 9,800 10,700Long-term debt 53,000 61,000Inventory 18,140 24,894New equity - 10,000

Tax rate 20%Dividend percentage 30%

Output area:

Case #1 - Cash Flows and Financial Statements at Sunset Boards


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Sales 165,390$Cost of goods sold 84,310Selling & Administrative 16,580Depreciation 23,800EBIT 40,700$

Interest 5,180EBT 35,520$Taxes 7,104Net income 28,416$

Dividends 8,525$Addition to retained earnings 19,891$

Sales 201,600$Cost of goods sold 106,450Selling & Administrative 21,640

Depreciation 26,900EBIT 46,610$Interest 5,930EBT 40,680$Taxes 8,136Net income 32,544$

Dividends 9,763$Addition to retained earnings 22,781$

Cash 12,165$ Accounts payable 21,500$

Accounts receivable 8,620 Notes payable 9,800

Inventory 18,140 Current liabilities 31,300$

Current assets 38,925$Long-term debt 53,000$

Net fixed assets 105,000$ Owners' equity 59,625$Total assets 143,925$ Total liab. & equity 143,925$

Cash 18,380$ Accounts payable 24,350$Accounts receivable 11,182 Notes payable 10,700Inventory 24,894 Current liabilities 35,050$Current assets 54,456$

Long-term debt 61,000$Net fixed assets 134,000$ Owners' equity 92,406$Total assets 188,456$ Total liab. & equity 188,456$

2004 2005Operating cash flow 57,396$ 65,374$

Balance sheet as of Dec. 31, 2005

2004 Income Statement

2005 Income Statement

Balance sheet as of Dec. 31, 2004


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Capital Spending

Ending net fixed assets 134,000$- Beginning net fixed assets 105,000+ Depreciation 26,900Net capital spending 55,900$

Change in Net Working CapitalEnding NWC 19,406$-Beginning NWC 7,625

Change in NWC 11,781$

Cash Flow from Assets

Operating cash flow 65,374$

- Net capital spending 55,900

-Change in NWC 11,781Cash flow from assets (2,307)$

Cash Flow to Creditors

Interest paid 5,930$

-Net New Borrowing 8,000

Cash flow to Creditors (2,070)$

Cash Flow to Stockholders

Dividends paid 9,763$-Net new equity raised 10,000

Cash flow to Stockholders (237)$


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Input area:

Sales 12,870,000$COGS 9,070,000$

Other expenses 1,538,000$Depreciation 420,000$EBIT 1,842,000$Interest 231,500$Taxable income 1,610,500$Taxes (40%) 644,200$Net income 966,300$

Dividends 289,890$Add to RE 676,410$

Current Assets Current LiabilitiesCash 234,000$ Accounts Payable 497,000$Accounts rec. 421,000$ Notes Payable 1,006,000$

Inventory 472,000$ Total CL 1,503,000$Total CA 1,127,000$

Long-term debt 2,595,000$Fixed assetsNet PP&E 7,228,000$ Shareholder Equity

Common stock 100,000$Retained earnings 4,157,000$

Total Equity 4,257,000$

Total Assets 8,355,000$ Total L&E 8,355,000$

Growth rate 20%Minimum FA purchase 3,000,000$

Output area:

Current ratio 0.75

Quick ratio 0.44

Cash ratio 0.16

Total asset turnover 1.54

Inventory turnover 19.22

Receivables turnover 30.57

Total debt ratio 0.49

Debt-equity ratio 0.96

Equity multiplier 1.96

Times interest earned 7.96

Cash coverage ratio 9.77

Profit margin 7.51%Return on assets 11.57%

Return on equity 22.70%

Retention ratio 0.70Internal growth rate 8.81%

Sustainable growth rate 18.89%

Sales 15,444,000$COGS 10,884,000$Other expenses 1,845,600$

Case #2 - Ratios and Financial Planning at S&S Air

Liabilities & EquityAssets


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Depreciation 420,000$EBIT 2,294,400$Interest 231,500$Taxable income 2,062,900$Taxes (40%) 825,160$Net income 1,237,740$

Dividends 371,322$Add to RE 866,418$

Current Assets Current LiabilitiesCash 280,800$ Accounts Payable 596,400$Accounts rec. 505,200$ Notes Payable 1,006,000$Inventory 566,400$ Total CL 1,602,400$

Total CA 1,352,400$Long-term debt 2,595,000$

Fixed assetsNet PP&E 8,673,600$ Shareholder Equity


Total Equity 425,700$


EFN 5,402,900$

EFN if minimum FA purchase is 3,000,000$

Current Assets Current LiabilitiesCash 280,800$ Accounts Payable 596,400$Accounts rec. 505,200$ Notes Payable 1,006,000$Inventory 566,400$ Total CL 1,602,400$

Total CA 1,352,400$Long-term debt 2,595,000$

Fixed assetsNet PP&E 10,228,000$ Shareholder Equity


Total Equity 425,700$


EFN 6,957,300$

Assets Liabilities & Equity

Assets Liabilities & Equity


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Case #4 - Conch Republic Electronics

Input Area:

Equipment $15,000,000Salvage value $3,000,000R&D $750,000 sunk costMarketing study $200,000 sunk cost

Year 1 Year 2 Year 3 Sales(units) 70,000 80,000 100,000Depreciation rate 14.29% 24.49% 17.49%Sales of old PDA 80,000 60,000Lost sales 15,000 15,000

Price $250VC $86FC $3,000,000Price of old PDA $240Price reductionof old PDA $20VC of old PDA $68Tax rate 35%NWC percentage 20%Required return 12%

Sensivity analysisNew price $260Quantity change 100 NOTE: Change in units per year

Output Area:

Sales Year 1 Year 2 Year 3

New $17,500,000 $20,000,000 $25,000,000Lost sales 3,600,000 3,600,000Lost rev. 1,300,000 900,000Net sales $12,600,000 $15,500,000 $25,000,000

VCNew $6,020,000 $6,880,000 $8,600,000Lost sales 1,020,000 1,020,000


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$5,000,000 $5,860,000 $8,600,000

Sales $12,600,000 $15,500,000 $25,000,000VC 5,000,000 5,860,000 8,600,000

Fixed costs 3,000,000 3,000,000 3,000,000Dep 2,143,500 3,673,500 2,623,500EBT $2,456,500 $2,966,500 $10,776,500Tax 859,775 1,038,275 3,771,775NI $1,596,725 $1,928,225 $7,004,725+Dep 2,143,500 3,673,500 2,623,500OCF $3,740,225 $5,601,725 $9,628,225

NWCBeg $0 $2,520,000 $3,100,000End 2,520,000 3,100,000 5,000,000NWC CF ($2,520,000) ($580,000) ($1,900,000)

Net CF $1,220,225 $5,021,725 $7,728,225

SalvageBV of equipment $3,346,500Taxes 121,275Salvage CF $3,121,275

Net CF Time

0 ($15,000,000)1 $1,220,2252 $5,021,7253 $7,728,2254 $8,516,7255 $13,885,100

Payback period 3.121PI 1.592IRR 27.79%NPV $8,884,884.28

Sensitivity to change in price

Sales Year 1 Year 2 Year 3 New $18,200,000 $20,800,000 $26,000,000Lost sales 3,600,000 3,600,000


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Lost rev. 1,300,000 900,000Net sales $13,300,000 $16,300,000 $26,000,000

VCNew $6,020,000 $6,880,000 $8,600,000

Lost sales 1,020,000 1,020,000$5,000,000 $5,860,000 $8,600,000

Sales $13,300,000 $16,300,000 $26,000,000VC 5,000,000 5,860,000 8,600,000Fixed costs 3,000,000 3,000,000 3,000,000Dep 2,143,500 3,673,500 2,623,500EBT $3,156,500 $3,766,500 $11,776,500Tax 1,104,775 1,318,275 4,121,775NI $2,051,725 $2,448,225 $7,654,725+Dep 2,143,500 3,673,500 2,623,500OCF $4,195,225 $6,121,725 $10,278,225

NWCBeg $0 $2,660,000 $3,260,000End 2,660,000 3,260,000 5,200,000NWC CF ($2,660,000) ($600,000) ($1,940,000)

Net CF $1,535,225 $5,521,725 $8,338,225


Net CF Time0 ($15,000,000)1 $1,535,2252 $5,521,7253 $8,338,2254 $9,099,2255 $14,542,600

NPV $10,742,189.61

DNPV/DP $185,730.53

Sensitivity to change in quantity


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Sales Year 1 Year 2 Year 3 New $17,525,000 $20,025,000 $25,025,000Lost sales 3,600,000 3,600,000Lost rev. 1,300,000 900,000

Net sales $12,625,000 $15,525,000 $25,025,000

VCNew $6,028,600 $6,888,600 $8,608,600Lost sales 1,020,000 1,020,000

$5,008,600 $5,868,600 $8,608,600

Sales $12,625,000 $15,525,000 $25,025,000VC 5,008,600 5,868,600 8,608,600Fixed costs 3,000,000 3,000,000 3,000,000Dep 2,143,500 3,673,500 2,623,500EBT $2,472,900 $2,982,900 $10,792,900Tax 865,515 1,044,015 3,777,515NI $1,607,385 $1,938,885 $7,015,385+Dep 2,143,500 3,673,500 2,623,500OCF $3,750,885 $5,612,385 $9,638,885

NWCBeg $0 $2,525,000 $3,105,000End 2,525,000 3,105,000 5,005,000

NWC CF ($2,525,000) ($580,000) ($1,900,000)

Net CF $1,225,885 $5,032,385 $7,738,885


Net CF Time0 ($15,000,000)1 $1,225,8852 $5,032,3853 $7,738,8854 $8,527,3855 $13,900,760

NPV $8,921,684.04


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DNPV/DQ $368.00


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Year 4 Year 5 85,000 75,000

12.49% 8.93%

Year 4 Year 5

$21,250,000 $18,750,000

$21,250,000 $18,750,000

$7,310,000 $6,450,000


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$7,310,000 $6,450,000

$21,250,000 $18,750,0007,310,000 6,450,000

3,000,000 3,000,0001,873,500 1,339,500

$9,066,500 $7,960,5003,173,275 2,786,175

$5,893,225 $5,174,3251,873,500 1,339,500

$7,766,725 $6,513,825

$5,000,000 $4,250,0004,250,000 0$750,000 $4,250,000

$8,516,725 $10,763,825

Year 4 Year 5 $22,100,000 $19,500,000


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$22,100,000 $19,500,000

$7,310,000 $6,450,000

$7,310,000 $6,450,000

$22,100,000 $19,500,0007,310,000 6,450,0003,000,000 3,000,0001,873,500 1,339,500

$9,916,500 $8,710,5003,470,775 3,048,675

$6,445,725 $5,661,8251,873,500 1,339,500

$8,319,225 $7,001,325

$5,200,000 $4,420,0004,420,000 0$780,000 $4,420,000

$9,099,225 $11,421,325


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Year 4 Year 5 $21,275,000 $18,775,000

$21,275,000 $18,775,000

$7,318,600 $6,458,600

$7,318,600 $6,458,600

$21,275,000 $18,775,0007,318,600 6,458,6003,000,000 3,000,0001,873,500 1,339,500

$9,082,900 $7,976,9003,179,015 2,791,915

$5,903,885 $5,184,9851,873,500 1,339,500

$7,777,385 $6,524,485

$5,005,000 $4,255,0004,255,000 0

$750,000 $4,255,000

$8,527,385 $10,779,485


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Case #5 - S&S Air's Convertible Bond

Input area:

Industry PE 12.50Company EPS 1.60$Conversion price (stock) 25.00$Maturity (years) 20.00$Convertible bond coupon 6%Conversion value of bond 800$Plain vanilla coupon 10%

Output area:

Stock price 20.00$

Intrinsic bond value $656.82

Floor value $800.00

Conversion ratio 32.00

Conversion premium 25.00%


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Input area:

Bond 1 book value 200$Bond 2 book value 300$BV of debt (balance sheet) 505$BV of equity 6,280$Stock price 35.05$Market capitalization 87,510$Shares outstanding (billions) 2.50Most recent dividend -$Beta 1.6773-month Treasury bill rate 1.60%

Market risk premium 8.60%Bond 1 price 109.575Bond 2 price 117.978Bond 1 YTM 3.645087%Bond 2 YTM 5.702993%Tax rate 35%

Output area:

kE from CAPM 16.02%

Book value

(millions)

Percent

of total

Market value

(millions)Bond 1 200$ 0.40 219.15$Bond 2 300 0.60 353.93Total 500$ 1.00 573.08$

Book value of company 6,785$ million

Market value of company 88,083.08$ million

WACC using book value 15.07%

WACC using market value 15.94%

Case #6 - The Cost of Capital for Hubbard Computer, Inc.


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Percent

of total

Yield to

Maturity

Book

values

Market

values0.38 3.65% 1.46% 1.39%0.62 5.70% 3.42% 3.52%1.00 4.88% 4.92%


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A B C D E F G H

Input Area:

Sales (1st quarter of next year) 784,000$

A/R 426,000$Percent uncollectible 10%Collection period 57% of purchases for next Q sales 50%Suppliers paid 53% of sales for expenses 25%Interest and dividends 85,000$Outlay in fourth Q 240,000$Beginning cash balance 164,000$Target cash balance 100,000$Borrowing rate 1.5%Invested securities 1.0%Beginning short-term borrowing -$Change the following three lines for credit termsCredit terms Piepkorn offers 0% / 10 net 45Percentage of customers taking credit 25%Credit terms offered to Piepkorn 0% / 15 net 40

Q1 Q2 Q3 Q4

Gross sales 695,000$ 708,000$ 741,000$ 757,000$

Output Area:

Sales after discount 695,000.00$ 708,000.00$ 741,000.00$ 757,000.00$Credit purchases after discount 354,000.00$ 370,500.00$ 378,500.00$ 392,000.00$

Q1: Cash flow 29,311.11$Q2: Cash flow 76,983.33$Q3: Cash flow 76,061.11$

Q4: Cash flow (151,433.33)$

Case #7 - Piepkorn Manufacturing Working Capital Management


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A B C D E F G H

Q1 Q2 Q3 Q4 Beginning cash balance 164,000.00$ 193,311.11$ 270,294.44$ 346,355.56$Net cash inflow 29,311.11 76,983.33 76,061.11 (151,433.33)Ending cash balance 193,311.11$ 270,294.44$ 346,355.56$ 194,922.22$Minimum cash balance 100,000.00 100,000.00 100,000.00 100,000.00

Cumulative surplus (deficit) 93,311.11$ 170,294.44$ 246,355.56$ 94,922.22$

Beginning cash balance 100,000.00$ 100,000.00$ 100,000.00$ 100,000.00$Net cash inflow 29,311.11 76,983.33 76,061.11 (151,433.33)New short-term investments (29,951.11) (77,922.84) (77,779.85) -Income on short-term investments 640.00 939.51 1,718.74 2,496.54Short-term investments sold - - - 148,936.80New short-term borrowing - - - -Interest on short-term borrowing - - - -Short-term borrowing repaid - - - -Ending cash balance 100,000.00$ 100,000.00$ 100,000.00$ 100,000.00$Minimum cash balance (100,000.00) (100,000.00) (100,000.00) (100,000.00)Cumulative surplus (deficit) -$ -$ -$ -$

Beginning short-term investments 64,000.00$ 93,951.11$ 171,873.96$ 249,653.81$

Ending short-term investments 93,951.11 171,873.96 249,653.81 100,717.01Beginning short-term debt - - - -Ending short-term debt -$ -$ -$ -$

Q1: Excess funds at start of quarter of $64,000.00 earns $640.00 in income.Q2: Excess funds at start of quarter of $93,951.11 earns $939.51 in income.Q3: Excess funds at start of quarter of $171,873.96 earns $1,718.74 in income.Q4: Excess funds at start of quarter of $249,653.81 earns $2,496.54 in income.

Net cash costQ1 640.00$Q2 939.51Q3 1,718.74Q4 2,496.54Cash generated by short-term financing 5,794.79$

Rate on credit offered by Piepkorn 0.00%

Rate on credit offered to Piepkorn 0.00%

Cash Balance

Short-term Financial Plan


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