Chapter 4 Problem 11 Problem 15, part f in Chapter 3 asks you to construct a five year financial projection for Aquatic Supplies beginning in 2015 The five year projection appears below a Calculate Aquatic Supplies's sustainable and actual growth rates in these years b What do these numbers suggest to you Aquatic Supplies Co Five Year Projected Income Statements and Balance Sheets Income Statement (in $ millions) Pro Forma Forecasts 2015 2019 2014 Assumptions 2015 2016 2017 2018 2019 Sales $ 582 762 12 652 693 731 017 818 739 916 987 1,027 026 Cost of Goods Sold 240 828 39 254 550 285 096 319 308 357 625 400 540 Gross Profit 341 934 398 143 445 920 499 431 559 362 626 486 Selling, General, Administrative Exp 257 507 49 319 820 358 198 401 182 449 324 503 243 Operating Income Before Deprec 84 427 78 323 87 722 98 249 110 038 123 243 Depreciation, Depletion, Amortization 25 221 30 29 371 32 896 36 843 41 264 46 216 Operating Profit 59 206 48 952 54 826 61 405 68 774 77 027 Interest Expense 16 430 initially constant 18 636 18 801 18 841 18 733 18 446 Pretax Income 42 776 30 316 36 025 42 564 50 041 58 581 Total Income Taxes 14 971 35 10 611 12 609 14 897 17 514 20 503 Net income $ 27 805 $ 19 705 $ 23 416 $ 27 667 $ 32 527 $ 38 078 Balance Sheet (in $ millions) ASSETS Cash Equivalents $ 7 152 2 13 054 14 620 16 375 18 340 20 541 Account Receivable 70 538 13 84 850 95 032 106 436 119 208 133 513 Inventories 39 033 5 32 635 36 551 40 937 45 849 51 351 Prepaid Expenses 9 339 no change 9 339 9 339 9 339 9 339 9 339 Other Current Assets 27 076 6 39 162 43 861 49 124 55 019 61 622 Total Current Assets 153 138 179 039 199 403 222 211 247 756 276 366 Net Plant, Property Equipment 81 648 15 97 904 109 652 122 811 137 548 154 054 Intangibles 9 415 no change 9 415 9 415 9 415 9 415 9 415 Other Assets 24 642 5 32 635 36 551 40 937 45 849 51 351 TOTAL ASSETS $ 268 843 318 993 355 022 395 374 440 568 491 186 LIABILITIES Accounts Payable $ 36 951 6 39 162 43 861 49 124 55 019 61 622 Accrued Expenses 31 206 5 32 635 36 551 40 937 45 849 51 351 Other Current Liabilities 3 663 no change 3 663 3 663 3 663 3 663 3 663 Total Current Liabilities 71 820 75 459 84 075 93 724 104 532 116 636 Long Term Debt 157 720 initially constant 186 363 188 010 188 414 187 327 184 462 Accrued wages 21 418 3 19 581 21 930 24 562 27 510 30 811 Total Liabilities 250 958 281 403 294 015 306 701 319 368 331 908 EQUITY Common Stock 1 702 no change 1 702 1 702 1 702 1 702 1 702 Capital Surplus 55 513 no change 55 513 55 513 55 513 55 513 55 513 Retained Earnings 118 729 no dividends paid so all income is retained 138 434 161 851 189 517 222 044 260 122 Less Treasury Stock 158 059 no change 158 059 158 059 158 059 158 059 158 059 TOTAL EQUITY 17 885 37 590 61 007 88 673 121 200 159 278 TOTAL LIABILITIES EQUITY $ 268 843 $ 318 993 $ 355 022 $ 395 374 $ 440 568 $ 491 186

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Chapter 4 Problem 11 Problem 15, part f. in Chapter 3 asks you to construct a five year financial projection for Aquatic Supplies beginning in

Chapter 4 Problem 11
Problem 15, part f. in Chapter 3 asks you to construct a five year financial projection for Aquatic Supplies beginning in 2015.
The five year projection appears below.
a. Calculate Aquatic Supplies's sustainable and actual growth rates in these years.
b. What do these numbers suggest to you?
	Aquatic Supplies Co. Five Year Projected Income Statements and Balance Sheets
			Income Statement (in $ millions)
			Pro Forma Forecasts 2015 - 2019
	2014	Assumptions	2015	2016	2017	2018	2019

Sales	$ 582.762	12%	652.693	731.017	818.739	916.987	1,027.026
Cost of Goods Sold	240.828	39%	254.550	285.096	319.308	357.625	400.540

Gross Profit	341.934		398.143	445.920	499.431	559.362	626.486
Selling, General, & Administrative Exp.	257.507	49%	319.820	358.198	401.182	449.324	503.243

Operating Income Before Deprec.	84.427		78.323	87.722	98.249	110.038	123.243
Depreciation, Depletion, & Amortization	25.221	30%	29.371	32.896	36.843	41.264	46.216

Operating Profit	59.206		48.952	54.826	61.405	68.774	77.027
Interest Expense	16.430	initially constant	18.636	18.801	18.841	18.733	18.446

Pretax Income	42.776		30.316	36.025	42.564	50.041	58.581
Total Income Taxes	14.971	35%	10.611	12.609	14.897	17.514	20.503

Net income	$ 27.805		$ 19.705	$ 23.416	$ 27.667	$ 32.527	$ 38.078


			Balance Sheet (in $ millions)
ASSETS
Cash & Equivalents	$ 7.152	2%	13.054	14.620	16.375	18.340	20.541
Account Receivable	70.538	13%	84.850	95.032	106.436	119.208	133.513
Inventories	39.033	5%	32.635	36.551	40.937	45.849	51.351
Prepaid Expenses	9.339	no change	9.339	9.339	9.339	9.339	9.339
Other Current Assets	27.076	6%	39.162	43.861	49.124	55.019	61.622
Total Current Assets	153.138		179.039	199.403	222.211	247.756	276.366

Net Plant, Property & Equipment	81.648	15%	97.904	109.652	122.811	137.548	154.054
Intangibles	9.415	no change	9.415	9.415	9.415	9.415	9.415
Other Assets	24.642	5%	32.635	36.551	40.937	45.849	51.351
TOTAL ASSETS	$ 268.843		318.993	355.022	395.374	440.568	491.186

LIABILITIES
Accounts Payable	$ 36.951	6%	39.162	43.861	49.124	55.019	61.622
Accrued Expenses	31.206	5%	32.635	36.551	40.937	45.849	51.351
Other Current Liabilities	3.663	no change	3.663	3.663	3.663	3.663	3.663
Total Current Liabilities	71.820		75.459	84.075	93.724	104.532	116.636

Long Term Debt	157.720	initially constant	186.363	188.010	188.414	187.327	184.462
Accrued wages	21.418	3%	19.581	21.930	24.562	27.510	30.811
Total Liabilities	250.958		281.403	294.015	306.701	319.368	331.908

EQUITY
Common Stock	1.702	no change	1.702	1.702	1.702	1.702	1.702
Capital Surplus	55.513	no change	55.513	55.513	55.513	55.513	55.513
Retained Earnings	118.729	no dividends paid so all income is retained	138.434	161.851	189.517	222.044	260.122
Less: Treasury Stock	158.059	no change	158.059	158.059	158.059	158.059	158.059

TOTAL EQUITY	17.885		37.590	61.007	88.673	121.200	159.278

TOTAL LIABILITIES & EQUITY	$ 268.843		$ 318.993	$ 355.022	$ 395.374	$ 440.568	$ 491.186