APPENDIX A: DRY SUPPLY'S FINANCIAL INFORMATION Income Statement Spread: Dry Supply Income Statement Review ($ in $000) 12/31/20xx Amount % Review 12/31/20xy Amount % Review 12/31/20xz Amount % Net sales $895 100.0 $937 100.0 $918 100.0 645 72.1 667 71.2 631 68.7 250 27.9 270 28.8 287 31.3 Cost of goods sold Gross profit Selling, gen. and admin. expense Officer's compensation Rent expenses 157 17.5 173 18.5 180 19.6 36 4.0 31 3.3 28 3.1 15 1.7 18 1.9 20 2.2 Bad debt expense 2 0.2 1 0.1 0 0 0.0 7 0.8 7 0.7 0 0 0.0 | 12 1.3 12 1.3 13 1.4 Profit-sharing expense Depreciation expense Total operating expenses Operating income Other income 229 25.6 242 25.8 241 26.3 21 2.3 28 3.0 46 5.0 0 0.0 0.0 0 0.0 Interest income 2 0.2 0.2 2 0.2 No | Rental income 3 0.3 3 0.3 3 0.3 Interest expense 6 0.7 7 0.7 11 1.2 Net profit before tax 20 2.2 26 2.8 40 4.4 11 1.2 12 1.3 17 1.9 Income tax expenses Net profit after tax $ 9 1.0 $ 14 1.5 $ 23 2.5 Balance Sheet Spread: Dry Supply Common size report ($ in $000) Review 12/31/20xx Review 12/31/20xy Review 12/31/20xz Assets Amount % Amount % Amount % Cash $ 3 1.2 $ 12 4.6 $ 22 8.1 Accounts receivable 114 46.9 118 45.4 117 43.3 Less: allowance for doubtful accounts 5 2.1 5 1.9 5 1.9 109 44.9 113 43.5 112 41.5 Net accounts receivable Inventory 73 30.0 72 27.7 67 24.8 Total current assets 185 76.1 197 75.8 201 74.4 Furniture and fixtures 76 31.3 75 28.8 78 28.9 Leasehold improvements 1 0.4 1 0.4 0 0.0 Transportation equipment 53 21.8 70 26.9 85 31.5 Gross fixed assets 130 53.5 146 56.2 163 60.4 Less: Accum. depreciation 85 35.0 37.3 110 40.7 97 49 Net fixed assets 45 18.5 18.8 53 19.6 Cash-value life insurance 13 5.3 14 5.4 16 5.9 Total assets $243 100.0 $260 100.0 $270 100.0 Common size report ($ in $000) Review 12/31/20xx Review 12/31/20xy Review 12/31/20xz Liabilities Amount % Amount % Amount % $81 33.3 $68 26.2 $59 21.8 42 17.3 46 17.7 31 11.5 5 2.1 6 2.3 7 2.6 10 4.1 11 4.2 12 4.4 138 56.8 131 50.4 109 40.4 48 19.8 58 22.3 67 24.8 Notes payable bank short-term Accounts payable trade Income taxes payable Accrued bonuses Total current liabilities Subordinated debt - officers Total liabilities Net Worth Common stock Retained earnings Total net worth Total liabilities and net worth 186 76.5 189 72.7 176 65.2 2 0.8 2 0.8 2 0.7 55 22.6 69 26.5 92 34.1 57 23.5 71 27.3 94 34.8 $243 100.0 $260 100.0 $270 100.0 Proposed loan request Dry Supply owner Kaitlyn Nieson has requested approximately $60,000 to purchase three new delivery vans in the coming year. Instructions Dry Supply's income and balance sheet spreads, plus the company's UCA cash flow model are provided in Appendix A. Answer the following questions using Dry Supply's financial information and what you have studied about loan structuring. 1. Is this loan request consistent with the profile of a typical wholesaler? 2. Based on the purpose of the loan and the use of funds, what type of borrowing arrangement(s) is (are) most appropriate? 3. Using the financial data, what are feasible repayment terms for Dry Supply for the appropriate borrowing arrangement you identified? APPENDIX A: DRY SUPPLY'S FINANCIAL INFORMATION Income Statement Spread: Dry Supply Income Statement Review ($ in $000) 12/31/20xx Amount % Review 12/31/20xy Amount % Review 12/31/20xz Amount % Net sales $895 100.0 $937 100.0 $918 100.0 645 72.1 667 71.2 631 68.7 250 27.9 270 28.8 287 31.3 Cost of goods sold Gross profit Selling, gen. and admin. expense Officer's compensation Rent expenses 157 17.5 173 18.5 180 19.6 36 4.0 31 3.3 28 3.1 15 1.7 18 1.9 20 2.2 Bad debt expense 2 0.2 1 0.1 0 0 0.0 7 0.8 7 0.7 0 0 0.0 | 12 1.3 12 1.3 13 1.4 Profit-sharing expense Depreciation expense Total operating expenses Operating income Other income 229 25.6 242 25.8 241 26.3 21 2.3 28 3.0 46 5.0 0 0.0 0.0 0 0.0 Interest income 2 0.2 0.2 2 0.2 No | Rental income 3 0.3 3 0.3 3 0.3 Interest expense 6 0.7 7 0.7 11 1.2 Net profit before tax 20 2.2 26 2.8 40 4.4 11 1.2 12 1.3 17 1.9 Income tax expenses Net profit after tax $ 9 1.0 $ 14 1.5 $ 23 2.5 Balance Sheet Spread: Dry Supply Common size report ($ in $000) Review 12/31/20xx Review 12/31/20xy Review 12/31/20xz Assets Amount % Amount % Amount % Cash $ 3 1.2 $ 12 4.6 $ 22 8.1 Accounts receivable 114 46.9 118 45.4 117 43.3 Less: allowance for doubtful accounts 5 2.1 5 1.9 5 1.9 109 44.9 113 43.5 112 41.5 Net accounts receivable Inventory 73 30.0 72 27.7 67 24.8 Total current assets 185 76.1 197 75.8 201 74.4 Furniture and fixtures 76 31.3 75 28.8 78 28.9 Leasehold improvements 1 0.4 1 0.4 0 0.0 Transportation equipment 53 21.8 70 26.9 85 31.5 Gross fixed assets 130 53.5 146 56.2 163 60.4 Less: Accum. depreciation 85 35.0 37.3 110 40.7 97 49 Net fixed assets 45 18.5 18.8 53 19.6 Cash-value life insurance 13 5.3 14 5.4 16 5.9 Total assets $243 100.0 $260 100.0 $270 100.0 Common size report ($ in $000) Review 12/31/20xx Review 12/31/20xy Review 12/31/20xz Liabilities Amount % Amount % Amount % $81 33.3 $68 26.2 $59 21.8 42 17.3 46 17.7 31 11.5 5 2.1 6 2.3 7 2.6 10 4.1 11 4.2 12 4.4 138 56.8 131 50.4 109 40.4 48 19.8 58 22.3 67 24.8 Notes payable bank short-term Accounts payable trade Income taxes payable Accrued bonuses Total current liabilities Subordinated debt - officers Total liabilities Net Worth Common stock Retained earnings Total net worth Total liabilities and net worth 186 76.5 189 72.7 176 65.2 2 0.8 2 0.8 2 0.7 55 22.6 69 26.5 92 34.1 57 23.5 71 27.3 94 34.8 $243 100.0 $260 100.0 $270 100.0 Proposed loan request Dry Supply owner Kaitlyn Nieson has requested approximately $60,000 to purchase three new delivery vans in the coming year. Instructions Dry Supply's income and balance sheet spreads, plus the company's UCA cash flow model are provided in Appendix A. Answer the following questions using Dry Supply's financial information and what you have studied about loan structuring. 1. Is this loan request consistent with the profile of a typical wholesaler? 2. Based on the purpose of the loan and the use of funds, what type of borrowing arrangement(s) is (are) most appropriate? 3. Using the financial data, what are feasible repayment terms for Dry Supply for the appropriate borrowing arrangement you identified