1. Why can?t profitable company like Jackson repay its loan on time? What majorcompany developments between August 2012 and May 2013 contribute to thissituation? Prepare a sources and uses of funds statement for Aug 2012 through May2013.2. Why does the company need a new loan? How urgent is the need for the additionalborrowing?3. Prepare monthly cash budget and pro forma income statements and balance sheetsfor the last four months of the fiscal year.4. Based on your forecasts and analysis of Jackson?s credit, is the company able to repayits loan at the end of the fiscal year? What are the risk associated with the proposedloan?25. Critically evaluate the assumptions on which your forecasts are based and performsensitivity analysis on the fiscal year?end cash balance when sales forecasts vary fromexpectations.6. Should the bank extend the maturity of the current loan and approve the additionalloan? What terms and conditions should the bank impose to reduce the risks of theloan to the bank?7. Why did the company repurchase a substantial fraction of its outstanding commonstocks? What?s the impact of the repurchase on Jackson?s financial condition?8. Critically assess the company?s proposed dividend payout in September 2013. Shouldthe bank agree with the payout? What seems to be an appropriate amount?

FIN5FMA Assignment FINANCIAL MANAGEMENT - SEMESTER 2, 2016 The research project is a case analysis based around applying subject content and knowledge to the identification of the financial management policies. The case provided focuses on cash forecasting for an automotive parts supplier that produces advanced automotive systems for large automobile assemblers located nearby. Expected learning outcomes from completing the research project: An appreciation of the structure and content of annual report documents, and the ability to understand and interpret qualitative and quantitative information presented in annual reports The ability to link corporate report and performance attributes with theoretical financial management principles and policies, as a means of identifying corporate decisionmaking practices The ability to critically analyse and evaluate the suitability of specific corporate decision making and transactions by firms and their potential impact on firm valuation and stockholder wealth The ability to develop and present a strategy plan for modifying a firm's financing policies. Overall, the idea behind this research project is to integrate a number of topics across the subject syllabus, as a means for students to understand the dynamic relationship between the various financial management decisions that firms have to make. It also represents an example of the sort of company analysis and assessment that a research analyst or consultant might undertake when they are evaluating a firm or conducting a strategic planning exercise Based on the provided case scenario and spread sheets data, students are requested to answer following questions in this assignment: 1. Why can't profitable company like Jackson repay its loan on time? What major company developments between August 2012 and May 2013 contribute to this situation? Prepare a sources and uses of funds statement for Aug 2012 through May 2013. 2. Why does the company need a new loan? How urgent is the need for the additional borrowing? 3. Prepare monthly cash budget and pro forma income statements and balance sheets for the last four months of the fiscal year. 4. Based on your forecasts and analysis of Jackson's credit, is the company able to repay its loan at the end of the fiscal year? What are the risk associated with the proposed loan? 1 5. Critically evaluate the assumptions on which your forecasts are based and perform sensitivity analysis on the fiscal yearend cash balance when sales forecasts vary from expectations. 6. Should the bank extend the maturity of the current loan and approve the additional loan? What terms and conditions should the bank impose to reduce the risks of the loan to the bank? 7. Why did the company repurchase a substantial fraction of its outstanding common stocks? What's the impact of the repurchase on Jackson's financial condition? 8. Critically assess the company's proposed dividend payout in September 2013. Should the bank agree with the payout? What seems to be an appropriate amount? General administration issue: The research project will represent 25% of the final assessment for this subject and is to be submitted in printed hard copy to the lecturer. The due date for submission of this research project is Tuesday 18th Oct 2016 (week12) lecture time. The research project can be completed in a group comprising up to a maximum of four (4) people, if desired. The research project should be a maximum of 3,000 words, including any calculations, tables and other exhibits, although it is envisaged that it can be successfully completed in significantly fewer words than this maximum limit. The completed report should be prepared in a professional manner, and include detailed presentation of information and arguments used to justify policy and decisionmaking conclusions drawn. Relevant calculations employed should be fully explained and be understandable and interpretable by the reader, and any important assumptions made should be clearly stated. Any resources used, besides the case and spreadsheet provided, should be appropriately identified and referenced. A signed and dated Statement of Authorship form should be submitted with the research project, and students are advised to make themselves aware of the University policies in relation to plagiarism. 2 Exhibit 1 Monthly Shipments at Selling Price (thousands of dollars) Month 2012 Forecast as of September 2012 Actual Forecast as of May 2013 October November December January February March April May 6,508 6,219 6,250 6,074 5,996 6,291 6,515 6,832 50,685 June July August September Twelve months total 6,759 6,645 6,478 6,433 26,315 12,681 7,374 7,201 7,394 34,650 Fiscal year total 77,000 78,664 2013 Eight months total 6,421 6,302 6,009 6,170 6,006 5,197 4,165 3,744 44,014 Exhibit 2 Balance Sheets, 2012-2013 (thousands of dollars) August September 2012 October November December Cash Accounts receivablea Inventory Current assets 8,350 5,793 7,154 21,297 3,328 5,969 7,364 16,661 3,523 6,421 7,524 17,468 4,511 5,851 7,219 17,581 4,239 6,009 7,277 17,525 Gross PP&E Accumulated depreciationb Net PP&E Prepaid expenses Total assets 45,500 30,368 15,132 242 36,671 45,500 30,488 15,012 58 31,731 45,500 30,608 14,892 23 32,383 45,500 30,728 14,772 45 32,398 45,500 30,848 14,652 47 32,224 4,977 5,197 5,347 5,352 5,110 0 5,000 5,000 5,000 5,000 252 1,500 1,651 8,380 4 1,542 1,651 13,394 174 1,542 1,651 13,714 331 1,542 1,200 13,425 107 1,542 1,200 12,959 Shareholders' equity 28,291 18,337 18,668 18,973 19,265 Total liabilities and equity 36,671 31,731 32,383 32,398 32,224 Accounts payablec Notes payable, bank Accrued taxesd Other accrued expenses Customer advance payments Current liabilities a Selling term of net 30 days. b Depreciation of $120,000 per month. c Purchase terms of net 30 days. Outstanding taxes on 2012 fiscal year income were due January 15, 2013. On December 15, 2011, March 15, 2012, June 15, 2012, and Sept the estimated tax for 2012 ($1,500,000) were due. Taxes payable for 2013 were assumed to be $1,500,000 and would be paid on December 1 September 15, 2013, in equal increments. d January February 2013 March April May 4,878 6,170 7,097 18,145 5,182 5,606 7,529 18,317 3,962 5,197 8,371 17,530 6,277 3,365 11,234 20,876 4,994 3,744 12,163 20,901 45,500 30,968 14,532 52 32,729 45,500 31,088 14,412 65 32,794 45,500 31,208 14,292 46 31,868 45,500 31,328 14,172 46 35,094 45,500 31,448 14,052 54 35,007 5,130 5,162 5,122 6,223 5,969 5,000 5,000 5,000 5,000 5,000 269 1,542 1,200 13,141 417 1,542 800 12,921 140 1,142 800 12,204 216 1,142 2,700 15,281 273 1,142 2,700 15,084 19,588 19,874 19,664 19,813 19,923 32,729 32,794 31,868 35,094 35,007 March 15, 2012, June 15, 2012, and September 15, 2012, payments of 25% of each of 0,000 and would be paid on December 15, 2012, March 15, 2013, June 15, 2013, and Exhibit 3 Income Statements, 2012-2013 (thousands of dollars) 2012 August 6,321 4,994 1,327 Net sales COGS Gross profit Operating expenses Depreciation and amortization Fiscal Year 2012 Ending September 09/30/2012 5,969 71,642 4,727 56,955 1,242 14,687 2012 2012 2012 2013 October November December January 6,421 6,302 6,009 6,170 5,003 4,914 4,695 4,815 1,418 1,388 1,314 1,355 773 120 763 120 9,509 1,440 777 120 788 120 733 120 728 120 0 0 0 25 25 25 25 Interest income Profit (loss) before tax 13 447 14 373 120 3,858 6 502 6 461 8 443 7 489 Income taxesc Net income Dividends 152 295 0 127 246 200 1,312 2,546 400 171 331 0 157 304 0 151 293 0 166 323 0 Interest expensea b a 6% annualized interest rate charged on outstanding bank loans. b 2% annualized rate of return on beginning monthly cash balances. c The federal tax rate on all earnings was 34%. 2013 2013 February March 6,006 5,197 4,692 4,087 1,314 1,110 2013 April 4,165 3,215 950 2013 May 3,744 2,876 868 Eight Months Total 44,014 34,297 9,717 744 120 685 120 587 120 566 120 5,608 960 25 25 25 25 200 8 433 9 289 7 225 10 167 60 3,009 147 286 0 98 191 400 76 148 0 57 111 0 1,023 1,986 400