6 Global Manufacturing, Inc. INCOME STATEMENT 7 2019 2020 89 0 1 $70,911,420 $48,113,332 $13,785,239 $85,218,840 57,181,806 16,873,362 9,012,849 11,163,672 12 13 TABLE #1 14 Total sales Cost of goods sold Administrative expense Earnings before interest, taxes, depreciation & amortization (EBITDA) Depreciation Earnings before interest & taxes.(EBIT) Interest expense Earnings Before Taxes (EBT) Taxes Net income Dividends Additions to Retained Earnings 15 16 1,700,510 7,312,339 1,390,284 5,922,055 1,243,632 4,678,423 1,169,606 3,508,818 2,027,160 9,136,512 1,603,312 7,533,200 1,581,972 5,951,228 1,487,807 4,463,421 17 18 19 20 21 24 Global Manufacturing, Inc. BALANCE SHEET 25 2019 2020 26 27 28 29 30 $2,836,450 8,509,350 20,351,550 31,697,350 22,975,245 $54,672,595 $1,851,754 $10,262,510 $23,144,820 35,259,084 $27,826,540 $63,085,624 31 32 33 34 TABLE #2 35 ASSETS Cash Accounts receivable Inventory Total Current Assets Net Fixed Assets TOTAL ASSETS LIABILITIES & STOCKHOLDER'S EQUITY Accounts payable Notes payable Total current liabilities Long-term debt TOTAL LIABILITIES Common stock Retained earnings* TOTAL STOCKHOLDERS' EQUITY TOTAL LIABILITIES & STOCKHOLDER'S EQUITY 36 37 38 $5,758,070 7,961,031 13,719,101 12,359,868 26,078,969 2,040,000 26,553,626 28,593,626 $7,151,072 10,094,260 17,245,332 12,783,245 30,028,577 2,040,000 31,017,047 33,057,047 39 40 41 42 $54,672,595 $63,085,624 43 44 45 Global Manufacturing, Inc. ADDITIONAL INFORMATION 46 Information 2019 2020 47 48 49 50 Depreciation as a % of net fixed assets Short-term interest expense Long-term interest expense Income tax rate Dividend payout ratio TABLE #3 7.68% 6.72% 6.92% 21.00% 25.00% 8.82% 7.12% 6.92% 21.00% 25.00% 51 52 Fixed assets as a percent of total capacity. 84.00% 91.00% 53 54 End of year stock price Number of common shares outstanding $67.13 1,750,000 $69.21 1,750,000 55 6 7 PNC Bank DATA INPUTS Wells Fargo 3.02% $4,578) 3.02% $4,578 8 Rate on money market investments 9 Average Customer payment 10 Average number of payments per day 11 Annual fee 51 51 $8.500 $17,850 12 Cost per transaction $0.54 $0.35 NOTE: Cells shaded in YELLOW are the cells you must provide the calculations or analysis. 13 Reduction in collection time 21 14 The questions that the CEO needs you to answer are as follows: 15 Wells Fargo PNC Bank $0 $0 (a) What is the Net Present Value (NPV) of each of the new lockbox system proposals (including the annual fixed charge)? (Round to the nearest whole dollar) 16 (Similar to Problem 27-11 Part (b)) (b) How many average payments per day are needed to make each of the lockbox systems break- even? (Round to the nearest whole customer) 17 (Similar to Problem 27-12 using GOAL SEEK function) 0 (c) Which is the Preferred Lockbox System for Global Manufacturing, Inc.? (Wells Fargo or PNC Bank) 18 Wells Fargo or PNC Bank? (d) How much of a reduction in accounts receivable should Global expect from the Preferred Lockbox System if implemented in 2021? Round to the nearest whole dollar) This value will automatically be transferred as your "Reduction in $0 Accounts Receivable" value on your PRO FORMA CORRECTIONS worksheet. 19 TO CALCULATE THE REDUCTION IN ACCOUNTS RECEIVABLES USE THE REDUCTION IN COLLECTION TIME FOR THE SELECTED LOCKBOX SYSTEM FROM PART"C" AND THIS FORMULA: 20 21 22 23 24 25 = Reduction in collection time x Average customer payment x Average number of payments per day