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Sales revenue ( 97,383 units at $100.

00 )
Income from securities
Cost of Goods Sold:
Beginning Inventory: ( 9,809 at $74.79 )
Materials
Direct Labor

$1,500,000
3,500,000

Total Direct Costs


Warehousing Costs
Depreciation: Mach. and Equip.
Plant
Other Overhead Costs
Total Indirect Costs

$5,000,000
$60,408
478,125
1,300,000
200,000
2,038,533

Production Costs ( 100,000 at $70.39 )


Goods Available for Sale ( $70.78 per unit )
Less: Ending Inventory ( 12,426 units )
Cost of Goods Sold
Gross Profit
Selling and administrative expenses
Financial Expenses:
Short Term Bank Interest
Penalty Loan Interest

$0
0

Intermediate Term Loan Interest

92,749

Bond Interest

33,600

Bond Redemption Costs


Total Financial Charges
Operating Income Before Extraordinary Items
Extraordinary Items
Income Before Taxes
Income Tax (rate is 10%)
Income After Taxes
Preferred Stock Dividind
Earnings to Common Stockholders
Common Stock Dividends ( $0.10 per share )
Net Income Transferred to Retained Earnings

$9,738,300
2,655

$9,740,955

$733,615

60000
$39.00

$1,417,500.00

70.38533

7,038,533

begning inventory and 100000 produced this time

$7,772,100

Per unit cost?

879,492

$6,892,608.00
$2,848,347
$1,486,915

1*10^6+0.05*E2+forecast+Adv

$9,719

126,349

1,235,083
$1,235,083
0
$1,235,083
123,508

10%

$1,111,575
0
$1,111,575
100,000
$1,011,575

0.1

Units Produced

100000

0.013275

40000

20000

>120000

$29.00

$25.00

$33.00

$1,486,915.00

$14.87

$3,500,000.00

Dividend to common

Inflows

Outflow
Material Purchased
Material Purchased Last Year
Direct Labour this year
Direct Labour from previous year
Warehouse fee
Overhead (90)
Selling and Admin
Short Term loan repay and Interest

Quarter
Cash Inflows
Cash Sales
Account Receivables Collected

$6,526,440

$1,350,000.0
0
3150000
0
$60,408

Q2

Income from Securities


Extraordinary Gain
Sale of Marketable Securities
Issuance of:

Short-term Bank Loans


Penalty Loans
2 Yr Loans
3 Yr Loans
10 Yr Bonds
Preferred Stock
Common Stock
TOTAL CASH INFLOWS
Cash Outflows
Production Cash Outflows:

Materials
Direct Labor
Warehousing Costs
Other Overhead Costs
Account Payable Payments
Financial Expenses:

Short-term Bank Loan Interest

$100,000.00
$1,500,000.00

$180,000.00

Q3

Q4

Penalty Loan Interest


2 Yr Loan Interest
3 Yr Loan Interest
10 Yr Bond Interest
Bond Redemption Costs
Selling and Administrative Expenses
Capital Expenditures:
3743300
Machinery
Plant
$17,110,000.00
Capital Budgeting Projects
Extraordinary Loss
Income Tax
Dividends:
Preferred Stock
Common Stock
Purchase of Marketable Securities
Principal payments and Retirement of:

Short-term Bank Loans


Penalty Loans
2 Yr Loans
3 Yr Loans
10 Yr Bonds
Preferred Stock
Common Stock
TOTAL CASH OUTFLOWS
Net Cash Flow for the Quarter
Beginning Cash Balance
Ending Cash Balance

Q5

Q6

Q7

Q8

Q9

Q10

Q11

Q12

ASSETS
Current Assets
Cash

$491,120

Marketable Securities
Accounts Receivable
Inventory ( 12,426 units at $70.78 /UNIT )

200,000
6,524,661
879,492

Total Current Assets

$8,095,272

Fixed Assets (net of depreciation


Machinery and Equipment
Plant

$2,008,125
7,165,250

Total Fixed Assets

9,173,375

Total Assets

$17,268,647

LIABILITIES AND OWNER EQUITY


Current Liabilities
Accounts Payable

$520,000

Short Term Loans Payable

Short Term Penalty Loan

Intermediate Term Debt Maturing

1,850,000

Bonds Maturing

1,200,000

Total Current Liabilities

$3,570,000

Long Term Liabilities


Intermediate Loans: 2 years
3 years
Bonds

$937,500
0
1,200,000

Total Long Term Liabilities

2,137,500

Total Liabilities

$5,707,500

Owners' Equity
Preferred Stock ( 0 shares )

$0

Common Stock ( 1,000,000 shares )

8,000,000

Retained Earnings

3,561,147

Total Equity
Total Liabilities and Equity

11,561,148
$17,268,647

Cash I will get


$3,216,294.00

$6,524,661.00

All maturing items within 1 year

937500

1,850,000

HISTORICAL INFORMATION
Common share price

$43.47

Accumulated Wealth

Quarterly EPS

$1.11

Dividend Yield

Price earnings ratio

9.78

Marketable Security Yield

Actual unit price

$100.00

Actual unit demand

Preferred stock price

$32.15

Preferred dividend yield

Return on investment

25.75%

Return on equity

Call premium: preferred

8.00%

Bond call premium

Common tender or sell/sh

$0.00

Unpaid preferred dividend/share

Short-term

2-year loan

3-year loan

2.98%

3.11%

2.50%

Units forecast

101,378

90,174

Price per unit forecast

$100.37

$96.43

Units of plant capacity

100,000

100,000

Units of machine capacity

100,000

100,000

Other overhead

200,000

200,000

Depreciation: Machinery

478,125

478,125

Projects

Plant

1,300,000

1,300,000

Outstanding debt yields:

INFORMATION FOR FUTURE QUARTERS:

Principal repayment on debt:


Short-term

2-year

312,500

312,500

3-year

300,000

300,000

Bonds

300,000

300,000

Warehouse fees:
Units

First 2000

Cost/Unit

$1.00

Production costs per unit next quarter:


Materials

$15.00

Machinery

Units

First 60,000

Next 40,000

Labor cost

$39.00

$29.00

Short-term

2-year loan

3-year loan

2.00%

1.95%

1.91%

Rates on funding in quarter 2

Interest due next quarter:


Short-term

$0

Intermediate

$83,030

Bonds

$33,600

Capital budgeting projects for next quarter:


Life

Cost

2-yr

$437,664

3-yr

$634,728

$43.57
0.93%
1.33%
97,383
3.11%

32.154340836

38.46%
8.00%
$0.00

Bonds

Penalty loan

1.40%

8.00%

124,132

111,898

$110.60

$104.80

100,000

80,000

75,000

60,000

200,000

200,000

384,375

311,250

1,300,000

989,000

312,500

312,500

1,250,000

2500000

600,000

900000

300,000

300,000

1,200,000

12,000,000

Next 5000

Over 7000

$3.00

$8.00

$41.00

Plant

Next 20,000

Over 120,000

$25.00

$33.00

Bond

Preferred

Next Year Prefered stock price

1.84%

2.40%

41.6319733555

$281.00

83031.25

Unit Capacity

Overhead Saving

Unit Labor sav., Qtr.2

Change/Qtr. Labor Sav.

100,000

$14,147

$0.54

$0.02

120,000

($7,395)

$1.05

$0.00

1417500

No of shares offered
Price
Currently Outstanding
Tender Price
Raised

15,000.00
68.80
1,000,000.00
61.73
925,886.52

Rwacc

Loan
short term
2
3
Bonds
Equity -preferred

cost of equity

1.98%
0
1.92% $2,787,500
1.85%
1.75%
2.62%

2.96200%

Demand
Production
Stock out Cost
Carrying Cost/unit

Probability of sale
Sale Price
Material
Labour cost (Till 120000)
Selling and Admin cost
Warehouse
Overhead costs
Profit Contribution
Expected Profit
Machine
Plant
Average invt.
Depreciation
Cost of capital
Cost of raising this capital
Total cost
Final Profit

Marginal Utility of extra unit


60%
70%
80%
100
100
100
15
25
15
3
2
40
24
$41.00
$281.00
$161.00
$19.18
3%
$4.83
84.005
($0.01)

15
25
15
3
2
40
28
$41.00
$281.00
$161.00
$19.18
3%
$4.83
84.005
$4.00

15
25
15
3
2
40
32
$41.00
$281.00
$161.00
$19.18
3%
$4.83
84.005
$8.00

2
101,378

3
90,174

Units of plant capacity

100,000

100,000

100,000

Units of machine capacity

100,000

100,000

100,000

Plant
Machine

Demand

Machine ordered
Plant Ordered
Expiring machine
Expiring Plant
Final Machine Cap
Final Plant Cap
My Capcity
Deficit
Inventory on hand

0
0
100,000
100,000
100,000

0
0
100,000
100,000
100,000

1,378
11,048

-9,826
20,874

2
101378
100000
100000

3
90174
100000
100000

12426

0
0
100000
100000
100000
90000
ok
11378
1,048

0
0
100000
100000
100000
90000
ok
174
874

0
0
0
0

1048
0
140500
141548

874
0
140500
141374

100,000
100,000

12426

1
Demand
Units of plant capacity
Units of machine capacity
Machine ordered
Plant Ordered
Expiring machine
Expiring Plant
Final Machine Cap
Final Plant Cap
My Capcity
Production
Danger
Deficit
Inventory on hand
Inventory Carrying cost
Stock out cost
Unused Dep cost
Total
Comments

100000
100000

100000
100000

Machine ordered
Plant Ordered

30000

Money Required

$8,680,000.00

Debt
Equity

52100

1.656

$14,374,080.00

$2,136,100.00

ICR

how many p
Plant
Fixed cost of odering
No of Units
Price/Unit
Total Cost

90%
100

100%
100

250000
1
$281.00
$250,281.00

15
25
15
3
2
40
36
$41.00
$281.00
$161.00
$19.18
3%
$4.83
84.005
$12.00

15
25
15
3
2
40
40
$41.00
$281.00
$161.00
$19.18
3%
$4.83
84.005
$16.00

4
124,132

5
111,898

6
100000

7
100000

8
100000

100,000

80,000

50000

50000

25000

75,000

60,000

60,000

5000

5000

Carrying Cost
1
2
3
4
5
6
7
8
9
10
11
12
13
14

Demand
101,378
90,174
124,132
111,898

15,000
20,000
140,100
140,500
140,100

15000
40500
0
30,000
155,100
151,000
151,000

55,000
0
115,332
151,000
115,332

0
25,000
115,332
126,000
115,332

20,032
842

-28,202
-56

-51,000
-56

-15,332
276

-15,332
376

4
124132
100000
75000
52100
40000
25000
0
127100
140000
127100
127100
ok
-2968
3,842

5
111898
80000
60000
14200

6
100000
50000
60000
15000

7
100000
50000
5000
15232

15000
20000
126300
120000
120000
119000
ok
-7102
10,944

0
30000
141300
90000
90000
90000
ok
10000
944

55000
0
101532
90000
90000
90000
ok
10000
-9,056

8
100000
25000
5000
16000
50000
0
25000
117532
115000
115000
102000
ok
-2000
-7,056

7526
0
181245
188771
order a plant

54552
0
14050
68602

944
0
0
944

-105448
0
0
-105448

-89448
0
182650
93202

14200

15000

15232

$582,200.00

$615,000.00

29100
60500
25,000
0
104,100
160,500
104,100

51000

15232

$12,013,300.00

Warehouse cost
2000
2k-7k
1
3

how many plant to order

Co

Capacity
100000
100000
75000
60000

Unused
1,378
-9,826
49,132
51,898

Cost of holding
Depreciation of unused

Cost of capital of extra

Chart Ti
140,000
120,000
100,000
80,000

9
100000

10
100000

25000

25000

60,000
40,000
20,000
0
1

100000
5,000
0
110,332
126,000
110,332

110,332

0
0
110,332
126,000
110,332

-10,332
10,708

-10,332

9
100000
25000
0

10
100000
25000
0

100000

5000
0
112532
115000
112532
102000
ok
-2000
-5,056

112532
115000
112532
102000
ok
-2000
96,944

-73448
0
182650
109202

742552
0
182650
925202

0
0
112532
115000
112532
ok
100000
-3,056

1615750
1615750

14

cost
>7k
8

Chart Title

10

11

100000

75000

60000

Demand
Production
Stock out Cost
Carrying Cost/unit

Probability of sale
Sale Price
Material
Labour cost (Till 120000)
Selling and Admin cost
Warehouse
Overhead costs
Profit Contribution
Expected Profit
Machine
Plant
Average invt.
Depreciation
Cost of capital
Cost of raising this capital
Total cost
Final Profit

Marginal Utility of extra unit


60%
70%
80%
100
100
100
15
25
15
3
2
40
24
$41.00
$281.00
$161.00
$19.18
3%
$4.83
84.005
($0.01)

15
25
15
3
2
40
28
$41.00
$281.00
$161.00
$19.18
3%
$4.83
84.005
$4.00

15
25
15
3
2
40
32
$41.00
$281.00
$161.00
$19.18
3%
$4.83
84.005
$8.00

2
101,378

3
90,174

Units of plant capacity

100,000

100,000

100,000

Units of machine capacity

100,000

100,000

100,000

Plant
Machine

Demand

Machine ordered
Plant Ordered
Expiring machine
Expiring Plant
Final Machine Cap
Final Plant Cap
My Capcity
Deficit
Inventory on hand

0
0
100,000
100,000
100,000

0
0
100,000
100,000
100,000

1,378
11,048

-9,826
20,874

2
101378
100000
100000

3
93831
100000
100000

0
0
100000
100000
100000
90000
ok
11378
1,048

0
0
100000
100000
100000
90800
ok
3031
1,674

0
0

1048
0
65000
179500
245548

1674
0
59800
165140
226614

100,000
100,000

12426

1
Demand
Units of plant capacity
Units of machine capacity
Machine ordered
Plant Ordered
Expiring machine
Expiring Plant
Final Machine Cap
Final Plant Cap
My Capcity
Production
Danger
Deficit
Inventory on hand
Inventory Carrying cost
Stock out cost
Unused Machine Dep cost
Unused Plant Dep cost
Total

100000
100000

100000
100000

12426
0
0

Cost difference

Machine ordered
Plant Ordered

52100
30000

Money Required

$8,680,000.00

$2,709,200.00

Debt
Equity
ICR

1.656

$14,374,080.00

how many plant t


Plant
Fixed cost of odering 250000
No of Units
1
Price/Unit
$281.00
Total Cost
$250,281.00

90%
100

100%
100

15
25
15
3
2
40
36
$41.00
$281.00
$161.00
$19.18
3%
$4.83
84.005
$12.00

15
25
15
3
2
40
40
$41.00
$281.00
$161.00
$19.18
3%
$4.83
84.005
$16.00

4
124,132

5
111,898

6
100000

100,000

80,000

75,000

60,000

Co

Carrying Cost
Demand
101,378
90,174
124,132
111,898

Capacity
100000
100000
75000
60000

7
100000

8
100000

9
100000

50000

50000

25000

25000

60,000

5000

5000

1
2
3
4
5
6
7
8
9
10
11
12
13
14

15,000
20,000
140,100
140,500
140,100

15000
40500
0
30,000
155,100
151,000
151,000

55,000
0
115,332
151,000
115,332

0
25,000
115,332
126,000
115,332

5,000
0
110,332
126,000
110,332

20,032
842

-28,202
-56

-51,000
-56

-15,332
276

-15,332
376

-10,332
10,708

4
119444
100000
75000
52100
30000
25000
0
127100
130000
127100
127100
ok
-7656
4,642

5
116171
80000
60000
14200

7
100000
50000
5000

8
100000
25000
5000
16000
50000
0
25000
87300
135000
87300
102000
Danger
-2000
-13,956

9
100000
25000
0

15000
20000
126300
110000
110000
110000
ok
6171
2,744

6
100578
50000
60000
0
30000
0
30000
126300
110000
110000
110000
ok
-9422
12,744

5000
0
82300
135000
82300
102000
Danger
-2000
-11,956

16226
0
0
52055
68281

10532
0
105950
0
116482

69752
0
105950
0
175702

1144
0
0
543735
544879
1377506

-144648
0

-128648
0

463650
319002

463650
335002

order a plant
4

14200

15000

15232

$738,400.00

$780,000.00

29100
60500
25,000
0
104,100
160,500
104,100

51000

15232

55000
0
71300
110000
71300
71300
ok
28700
-15,956

$12,907,600.00

Warehouse cost
2000
2k-7k
1
3

>7k
8

how many plant to order

Unused
1,378
-9,826
49,132
51,898

Cost of holding
Depreciation of unused

Cost of capital of extra

Chart Title
140,000
120,000
100,000
80,000

10
100000
25000
0

60,000
40,000
20,000
0
1

100000

110,332

0
0
110,332
126,000
110,332
-10,332

100000

82300
135000
82300
102000
Danger
-2000
90,044

10
100000
25000
0

0
0
82300
135000
82300
ok
100000
-9,956

687352
0
463650
1151002

1896750
1896750

14

100000

Chart Title

10

11

75000

60000

93,831
$98.21
$9,215,142.51

119,444
$106.54
###

116,171
$105.10
###

100,578
$98.20
###

Demand
Production
Stock out Cost
Carrying Cost/unit

Probability of sale
Sale Price
Material
Labour cost (Till 120000)
Selling and Admin cost
Warehouse
Overhead costs
Profit Contribution
Expected Profit
Machine
Plant
Average invt.
Depreciation
Cost of capital
Cost of raising this capital
Total cost
Final Profit

Marginal Utility of extra unit


60%
70%
80%
100
100
100
15
25
15
3
2
40
24
$41.00
$281.00
$161.00
$19.18
3%
$4.83
84.005
($0.01)

15
25
15
3
2
40
28
$41.00
$281.00
$161.00
$19.18
3%
$4.83
84.005
$4.00

15
25
15
3
2
40
32
$41.00
$281.00
$161.00
$19.18
3%
$4.83
84.005
$8.00

2
102,285

3
93,506

Units of plant capacity

100,000

100,000

100,000

Units of machine capacity

100,000

95,000

90,000

Plant
Machine

Demand

Machine ordered
Plant Ordered
Expiring machine
Expiring Plant
Final Machine Cap
Final Plant Cap
My Capcity

5,000
0
95,000
100,000
95,000

5,000
0
90,000
100,000
90,000

7,285
5,141

3,506
1,635

1
Demand
Production
Units of plant capacity

2
102,285

3
93,506

100000

100000

100000

Units of machine capacity

100000

100000

100000

12426

0
0
100000
100000
100000
95000
7285
5,141

0
0
100000
100000
100000
90000
3506
1,635

67686

2423

1,635

Deficit
Inventory on hand

Machine ordered
Plant Ordered
Expiring machine
Expiring Plant
Final Machine Cap
Final Plant Cap
My Capcity
Production
Deficit
Inventory on hand
Inventory Carrying cost
unused dep cost

100,000
100,000

12426

100000
100000

Machine ordered
Plant Ordered

60000

Money

$17,110,000.00

52100

$2,136,100.00

Int

how many plant t


Plant
Fixed cost of odering 250000
No of Units
1
Price/Unit
$281.00
Total Cost
$250,281.00

90%
100

100%
100

15
25
15
3
2
40
36
$41.00
$281.00
$161.00
$19.18
3%
$4.83
84.005
$12.00

15
25
15
3
2
40
40
$41.00
$281.00
$161.00
$19.18
3%
$4.83
84.005
$16.00

4
116,722

5
111,171

6
102179

100,000

80,000

75,000

60,000

Co

Carrying Cost
Demand
101,378
90,174
124,132
111,898

Capacity
100000
100000
75000
60000

7
108788

8
100000

9
100000

50000

50000

25000

25000

60,000

5000

5000

1
2
3
4
5
6
7
8
9
10
11
12
13
14

35000
35000
15,000
0
110,000
135,000
110,000

15,000
20,000
95,000
115,000
95,000

40500
0
30,000
95,000
125,500
95,000

55,000
0
40,000
125,500
40,000

0
25,000
40,000
100,500
40,000

5,000
0
35,000
100,500
35,000

6,722
-5,087

16,171
-56,258

7,179
-63,437

68,788
-132,225

60,000
-192,225

65,000
-257,225

4
120,000

5
113,654

6
99000

7
100000

8
134000

9
96000

100000

80000

50000

50000

25000

25000

75000

60000

60000

5000

5000

35000
35000
25000
0
110000
135000
110000
110000
10000
-5,087

20000

50000

15000
20000
115000
115000
115000
115000
-1346
-1,258

0
30000
0
30000
115000
115000
115000
115000
-16000
11,563

55000
0
110000
115000
110000
110000
-10000
12,775

25000
0
25000
110000
115000
110000
110000
24000
22,775

5000
0
105000
115000
105000
102000
-6000
24,775

24200

15000

15232

$992,200.00

$615,000.00

-5087

$3,743,300.00
$72,994.35

Warehouse cost
2k-7k
3

2000
1

>7k
8

how many plant to order

Unused
1,378
-9,826
49,132
51,898

Cost of holding
Depreciation of unused

Cost of capital of extra

Chart Title
140,000
120,000
100,000
80,000

10
100000
25000
0

60,000
40,000
20,000
0
1

35,000

0
0
35,000
100,500
35,000

100000

100000

16576359

715389

35000
306
10960000

50000
44
2200000

65,000

10
100000
25000
0

105000
115000
105000
102000
-102000
126,775
P
EPS
P/E

Funds Needed
1000000
10480000
11480000

0
0
105000
115000
105000

$3,000,000.00

100000
26,775
43.57
1.11
39.2522522523

68.19
1.01
67.5148514851

68.19
0.6503536364
104.8506476896

1.056

Chart Title

10

11

75000

60000

0.043157

13160000 1725000
14885000 -3000000
Debt
1,250,000
1,800,000

Debt

11885000
Equity
3500000

5250000

18,554,676

0.282948
14843740.8
9593740.8

7,500,000
26,944,82

Debt
Equity
Current Assets
Total Assets
Current L
EBIT
Interest
Net Income
Total Outstanding

13,049,999

12,466,544
8,937,519
25,977,559
4,111,015

1439624
433,628
$905,397

D/E
EPS
ROA

1.046802

ROE
ROI
CR
ICR

29.05
13.94
2.174042
3.319952

0.91

0.034853

Company Operating Decisions


Units to be produced

90,000

Div. per common share

$0.00

Demand/price forecast

$75,000

Investment Decisions
Short-term investment
Machine units bought
Project A

$0
0
yes

Financing Decisions
Short-term loans

$0

Two-year loans

$0

Three-year loans

$0

Ten-year bonds

$9,000,000

Special Options
Strike settlement (per hr.)

$0.00
Quarterly Performance Report
Quarter Number 2

Sales revenue ( 102,285 units at $101.65 )


Income from securities
Cost of Goods Sold:
Beginning Inventory: ( 12,426 at $70.78 )
Materials
Direct Labor

$1,350,000
3,066,900

Direct Labor

3,066,900

Total Direct Costs


Warehousing Costs
Depreciation: Mach. and Equip.
Plant
Other Overhead Costs
Total Indirect Costs
Production Costs ( 90,000 at $72.18 )
Goods Available for Sale ( $72.01 per unit )
Less: Ending Inventory ( 141 units )
Cost of Goods Sold
Gross Profit
Selling and administrative expenses
Financial Expenses:
Short Term Bank Interest
Penalty Loan Interest
Intermediate Term Loan Interest
Bond Interest
Bond Redemption Costs
Total Financial Charges
Operating Income Before Extraordinary Items
Extraordinary Items
Income Before Taxes

$141
585,727
1,300,000
193,248

Income Tax (rate is 10%)


Income After Taxes
Preferred Stock Dividind
Earnings to Common Stockholders
Common Stock Dividends ( $0.00 per share )
Net Income Transferred to Retained Earnings
Position Statement
Quarter Number 2
ASSETS
Current Assets
Cash

$1,761,196

Marketable Securities
Accounts Receivable
Inventory ( 141 units at $72.01 /UNIT )

200,000
6,966,171
10,153

Total Current Assets


Fixed Assets (net of depreciation
Machinery and Equipment
Plant

$2,494,790
14,545,250

Total Fixed Assets


Total Assets
LIABILITIES AND OWNER EQUITY
Current Liabilities
Accounts Payable

$461,015

Accounts Payable

$461,015

Short Term Loans Payable

Short Term Penalty Loan

Intermediate Term Debt Maturing

1,550,000

Bonds Maturing

2,100,000

Total Current Liabilities


Long Term Liabilities
Intermediate Loans: 2 years
3 years
Bonds

$625,000
0
8,775,000

Total Long Term Liabilities


Total Liabilities
Owners' Equity
Preferred Stock ( 0 shares )

$0

Common Stock ( 1,000,000 shares )

8,000,000

Retained Earnings

4,466,545

Total Equity
Total Liabilities and Equity

Summary Data
Quarter Number 2
HISTORICAL INFORMATION
Common share price
Quarterly EPS

$68.20
$0.91

Quarterly EPS

$0.91

Price earnings ratio

18.83

Actual unit price

$101.65

Preferred stock price

$41.63

Return on investment

13.94%

Call premium: preferred

8.00%

Common tender or sell/sh

$0.00

Outstanding debt yields:


Short-term

2-year loan

2.00%

3.11%

INFORMATION FOR FUTURE QUARTERS:


3
Units forecast
Price per unit forecast
Second forecast: units
Second forecast: price
Third forecast: units
Third forecast: price

91,414
$99.19
95,061
$97.33
93,831
$98.21

Units of plant capacity

100,000

Units of machine capacity

100,000

Other overhead

193,248

Depreciation: Machinery

478,125

Projects

107,602

Plant

1,300,000

Principal repayment on debt:


Short-term

2-year

312,500

3-year

300,000

Bonds

525,000

Warehouse fees:
Units
Cost/Unit
Production costs per unit next quarter:
Materials

$15.00

Units

First 60,000

Labor cost

$37.39

Rates on funding in quarter 3


Short-term

2-year loan

1.94%

1.91%

Interest due next quarter:


Short-term

$0

Intermediate

$65,812

Bonds

$286,755

Capital budgeting projects for next quarter:


Life
A

2-yr

2-yr

3-yr

Per unit price


Advertising cost
Sales discount

Risk of S-T investment


Units of plant bought
Project B

Preferred shares
Common shares
Common tender price

Dollar penalty
Quarterly Performance Report
Quarter Number 2
$10,397,270
2,571

$879,492

$10,399,841

$4,416,900

2,079,115
6,496,016
$7,375,507
10,153
7,365,354
$3,034,487
$1,594,863

$0
0
83,030
350,598
0
433,628

2,028,490
$1,005,997
0
$1,005,996

100,599
$905,397
0
$905,397
0
$905,397
Position Statement
Quarter Number 2

$8,937,519

17,040,040
$25,977,559

$4,111,015

9,400,000
$13,511,014

12,466,544
$25,977,559

mary Data

er Number 2

Accumulated Wealth
Dividend Yield

$68.31
0.00%

Dividend Yield

0.00%

Marketable Security Yield

1.29%

Actual unit demand

102,285

Preferred dividend yield

2.40%

Return on equity

29.05%

Bond call premium

8.00%

Unpaid preferred dividend/share

$0.00

3-year loan

Bonds

Penalty loan

2.50%

2.64%

8.00%

108,024

100,599

116,094

$108.23
114,833
$106.35
119,444
$106.54

$104.91
118,889
$102.69
116,171
$105.10

$100.22
93,242
$98.73
100,578
$98.20

130,000

110,000

80,000

75,000

60,000

60,000

193,248

193,248

193,248

384,375

311,250

311,250

107,602

107,602

107,602

Machinery

1,734,000

1,423,000

1,101,500

312,500

312,500

312,500

525,000

525,000

525,000

First 2000

Next 5000

Over 7000

$1.00

$3.00

$8.00

$52.00

Plant

Next 40,000

Next 20,000

Over 120,000

$27.39

$23.95

$33.00

3-year loan

Bond

Preferred

1.88%

1.88%

2.33%

Cost

Unit Capacity

Overhead Saving

$499,248

100,000

$13,320

$499,248

100,000

$13,320

$482,424

120,000

($8,254)

$101.65
$0
0.00%

0
30,000
yes

0
0
$0

$0

$359.00

Unit Labor sav.,


Change/Qtr.
Qtr.3 Labor Sav.
$0.62

$0.01

$0.62

$0.01

$0.80

($0.01)

Company Operating Decisions


Units to be produced

90,800

Div. per common share

$0.00

Demand/price forecast

$75,000

Investment Decisions
Short-term investment
Machine units bought
Project A

$0
52,100
yes

Financing Decisions
Short-term loans

$0

Two-year loans

$0

Three-year loans

$0

Ten-year bonds

$0

Special Options
Strike settlement (per hr.)

$0.00
Quarterly Performance Report
Quarter Number 3

Sales revenue ( 90,941 units at $98.68 )


Income from securities
Cost of Goods Sold:
Beginning Inventory: ( 141 at $72.01 )
Materials
Direct Labor

$1,362,000
2,958,076

Direct Labor

2,958,076

Total Direct Costs


Warehousing Costs
Depreciation: Mach. and Equip.
Plant
Other Overhead Costs
Total Indirect Costs
Production Costs ( 90,800 at $71.55 )
Goods Available for Sale ( $71.55 per unit )
Less: Ending Inventory ( 0 units )
Cost of Goods Sold
Gross Profit
Selling and administrative expenses
Financial Expenses:
Short Term Bank Interest
Penalty Loan Interest
Intermediate Term Loan Interest
Bond Interest
Bond Redemption Costs
Total Financial Charges
Operating Income Before Extraordinary Items
Extraordinary Items
Income Before Taxes

$0
688,335
1,300,000
188,181

Income Tax (rate is 10%)


Income After Taxes
Preferred Stock Dividind
Earnings to Common Stockholders
Common Stock Dividends ( $0.00 per share )
Net Income Transferred to Retained Earnings
Position Statement
Quarter Number 3
ASSETS
Current Assets
Cash

$1,326,180

Marketable Securities
Accounts Receivable
Inventory ( 0 units at $71.55 /UNIT )

200,000
6,012,619
0

Total Current Assets


Fixed Assets (net of depreciation
Machinery and Equipment
Plant

$5,497,327
13,245,250

Total Fixed Assets


Total Assets
LIABILITIES AND OWNER EQUITY
Current Liabilities
Accounts Payable

$450,826

Accounts Payable

$450,826

Short Term Loans Payable

Short Term Penalty Loan

Intermediate Term Debt Maturing

1,250,000

Bonds Maturing

2,100,000

Total Current Liabilities


Long Term Liabilities
Intermediate Loans: 2 years
3 years
Bonds

$312,500
0
8,250,000

Total Long Term Liabilities


Total Liabilities
Owners' Equity
Preferred Stock ( 0 shares )

$0

Common Stock ( 1,015,000 shares )

8,917,439

Retained Earnings

5,000,610

Total Equity
Total Liabilities and Equity

Summary Data
Quarter Number 3
HISTORICAL INFORMATION
Common share price
Quarterly EPS

$57.47
$0.53

Quarterly EPS

$0.53

Price earnings ratio

27.31

Actual unit price

$98.68

Preferred stock price

$42.89

Return on investment

8.13%

Call premium: preferred

8.00%

Common tender or sell/sh

$61.16

Outstanding debt yields:


Short-term

2-year loan

1.94%

3.11%

INFORMATION FOR FUTURE QUARTERS:


4
Units forecast
Price per unit forecast
Second forecast: units

116,722
$106.43
120,345

Second forecast: price

$106.28

Third forecast: units

118,895

Third forecast: price

$106.76

Units of plant capacity

130,000

Units of machine capacity

127,100

Other overhead

188,181

Depreciation: Machinery

723,025

Projects

210,210

Plant

1,734,000

Principal repayment on debt:


Short-term

2-year

312,500

3-year

Bonds

525,000

Warehouse fees:
Units
Cost/Unit
Production costs per unit next quarter:
Materials

$15.00

Units

First 60,000

Labor cost

$35.95

Rates on funding in quarter 4


Short-term

2-year loan

2.38%

2.41%

Interest due next quarter:


Short-term

$0

Intermediate

$48,593

Bonds

$272,911

Capital budgeting projects for next quarter:


Life
A

2-yr

2-yr

3-yr

Per unit price


Advertising cost
Sales discount

Risk of S-T investment


Units of plant bought
Project B

Preferred shares
Common shares
Common tender price

Dollar penalty
Quarterly Performance Report
Quarter Number 3
$8,974,058
2,361

$10,153

$8,976,419

$4,320,075

2,176,516
6,496,593
$6,506,745
0
6,506,745
$2,469,673
$1,523,702

$0
0
65,811
286,755
0
352,566

1,876,267
$593,406
0
$593,406

59,340
$534,066
0
$534,066
0
$534,066
Position Statement
Quarter Number 3

$7,538,797

18,742,577
$26,281,374

$3,800,826

8,562,500
$12,363,325

13,918,050
$26,281,374

mmary Data

ter Number 3

Accumulated Wealth
Dividend Yield

$57.58
0.00%

Dividend Yield

0.00%

Marketable Security Yield

1.18%

Actual unit demand

93,506

Preferred dividend yield

2.33%

Return on equity

15.35%

Bond call premium

8.00%

Unpaid preferred dividend/share

$0.00

3-year loan

Bonds

Penalty loan

2.50%

2.64%

8.00%

111,171

102,179

108,788

$106.47
111,509

$97.42
98,357

$103.19
101,665

$105.29

$99.82

$101.99

112,049

97,915

102,425

$103.97

$98.83

$102.70

110,000

80,000

80,000

112,100

112,100

57,100

188,181

188,181

188,181

649,900

649,900

361,150

210,210

210,210

210,210

Machinery

1,423,000

1,101,500

1,101,500

312,500

312,500

312,500

525,000

525,000

525,000

First 2000

Next 5000

Over 7000

$1.00

$3.00

$8.00

$50.00

Plant

Next 40,000

Next 20,000

Over 120,000

$25.95

$23.16

$33.00

3-year loan

Bond

Preferred

2.47%

2.78%

3.57%

Cost

Unit Capacity

Overhead Saving

$669,696

100,000

$14,582

$669,696

100,000

$14,582

$536,544

120,000

($7,820)

$98.68
$0
0.00%

0
0
yes

0
15,000
$62

$0

$341.00

Unit Labor sav.,


Change/Qtr.
Qtr.4 Labor Sav.
$0.83

$0.03

$0.83

$0.03

$0.89

$0.00

Cash
Net Working Capital

$1,326,180

2
Forecasted Demand
Machine Capacity
Plant Capacity

4
118895
130000
127100

5
112049
110000
112100

6
97915
80000
112100

127100

112100

112100

Machine Ordered
Plant Ordered
New Machine Cap
New Plant Cap
My capacity
Production
Inventory
Status
Total Units
Stock Out

127100

112100

112100

ok

ok

0
ok
0

118895

112049

97915

7
102425
80000
57100

10

11

12

13

14

57100
57100

ok
0
102425

15

16

Capital Budgeting Project A

Capacity: 100,000 Units


0
Initial Cost

Current Period's Decisions

($437,664)

Per Unit Labor Savings

Per Unit Savings


Units
Annual Labor Savings

$0.54

100,000

$0.56
100,000

$54,000

$56,000

Overhead Savings (add expenses)


Reduction in Expenses

$14,147

$14,147

Depreciation

$68,147
$54,708

$70,147
$54,708

Increase (decrease) in Operating


Income

$13,439

$15,439

$1,344
$12,095
$54,708
$66,803

$1,544
$13,895
$54,708
$68,603

Increase (decrease) in Income Taxes @ 10%

Increase (decrease) in Net Income


Add: Depreciation
Increased Operating Cash Flow
CASH FLOW
Internal Rate of Return (IRR)
WACC- Cost of Capital
Internal Rate of Return
PV of Cash Flows
Net Present Value
Bold: No Input Necessary

$(437,664)
$66,803
$68,603
6.72% Reject Cost of Capital > IRR
2.38%
$(437,664)
$65,247
$87,474 Reject NPV < 0

$65,444

Current Period's Decisions

$0.58
100,000

$0.60
100,000

$0.62
100,000

$0.64
100,000

$0.66
100,000

$0.68
100,000

$58,000

$60,000

$62,000

$64,000

$66,000

$68,000

$14,147

$14,147

$14,147

$14,147

$14,147

$14,147

$72,147
$54,708

$74,147
$54,708

$76,147
$54,708

$78,147
$54,708

$80,147
$54,708

$82,147
$54,708

$17,439

$19,439

$21,439

$23,439

$25,439

$27,439

$1,744
$15,695
$54,708
$70,403

$1,944
$17,495
$54,708
$72,203

$2,144
$19,295
$54,708
$74,003

$2,344
$21,095
$54,708
$75,803

$2,544
$22,895
$54,708
$77,603

$2,744
$24,695
$54,708
$79,403

$70,403

$72,203

$74,003

$75,803

$77,603

$79,403

$65,597

$65,707

$65,777

$65,807

$65,800

$65,758

Capital Budgeting Project B

Capacity: 120,000 Units


1

Current Period's Decisions

$1.05
100,000
$105,000

$1.05
100,000
$105,000

$1.05
100,000
$105,000

$(7,395)

$(7,395)

$(7,395)

$97,605
$52,894

$97,605
$79,341

$97,605
$79,341

Increase (decrease) in Operating


Income

$44,711

$18,264

$18,264

Increase (decrease) in Income Taxes


@ 40%
Increase (decrease) in Net Income
Add: Depreciation
Increased Operating Cash Flow

$4,471
$40,240
$52,894
$93,134

$1,826
$16,438
$79,341
$95,779

$1,826
$16,438
$79,341
$95,779

$(634,728)
$93,134
$95,779
10.49% Accept IRR > Cost of Capital
2.38%

$95,779

$(634,728)
$90,965
$352,047 Accept NPV > 0

$89,240

Initial Cost

0
$(634,728)

Per Unit Labor Savings

Per Unit Savings


Units
Annual Labor Savings
Overhead Savings (add. Expenses)
Reduction in Expenses
Depreciation

CASH FLOW
Internal Rate of Return (IRR)
WACC- Cost of Capital
Internal Rate of Return
PV of Cash Flows
Net Present Value
Bold: No Input Necessary

$91,369

Decisions

10

$1.05
100,000
$105,000

$1.05
100,000
$105,000

$1.05
100,000
$105,000

$1.05
100,000
$105,000

$1.05
100,000
$105,000

$1.05
100,000
$105,000

$1.05
100,000
$105,000

$(7,395)

$(7,395)

$(7,395)

$(7,395)

$(7,395)

$(7,395)

$(7,395)

$97,605
$79,341

$97,605
$79,341

$97,605
$79,341

$97,605
$79,341

$97,605
$79,341

$97,605
$79,341

$97,605
$79,341

$18,264

$18,264

$18,264

$18,264

$18,264

$18,264

$18,264

$1,826
$16,438
$79,341
$95,779

$1,826
$16,438
$79,341
$95,779

$1,826
$16,438
$79,341
$95,779

$1,826
$16,438
$79,341
$95,779

$1,826
$16,438
$79,341
$95,779

$1,826
$16,438
$79,341
$95,779

$1,826
$16,438
$79,341
$95,779

$95,779

$95,779

$95,779

$95,779

$95,779

$95,779

$95,779

$87,162

$85,131

$83,148

$81,212

$79,320

$77,472

$75,668

11

12

$1.05
100,000
###

$1.05
100,000
$105,000

$(7,395)

$(7,395)

$97,605
$79,341

$97,605
$79,341

$18,264

$18,264

$1,826
$16,438
$79,341
$95,779

$1,826
$16,438
$79,341
$95,779

$95,779

$95,779

$73,905

$72,184

Cost of Capital or Weighted Average Cost of Capital (WACC)

Before-Tax Cost of Bonds


Tax Rate
After-Tax Cost of Debt
Equity
Cost of (Common Stock) Equity

Weighted Average Cost of Capital (WACC)

Total Debt (TL - Acc payable)


Total Equity
Total LT financing*
* Intermediate and ST debt excluded for simplification
WACC*

* Keep in mind this is quarterly


Approximate annual WACC-- how it is normally viewed)

2.64%
10.00%
2.38%

12.93%

3.78000%

Percentage of Long
Term Debt
Financing and
Equity
$11,912,499
13,918,050.00
25,830,549.00

3.13%
12.53%

46.12%
53.88%
100.00%

D/E

0.855903