Directions Click the "Case-link" displayed above and use the information provided in Brook Plumbing Supply, to answer this questioni Which of the following describes a reasonable best-case projection scenario for Brook Plumbing and Supply Home Depot suspends plans to open a new store in Brook's city so sales increase 30% Brook's largest supplier successfully negotiates a renewal of its labor contract averting a major strike Zero to five percent growth in new housing starts helps increase sales by 8% Ten to the percent growth in new housing starts helps increase sales by 15% Brook Plumbing Supply Company, Inc. Part A Company Information Brook Plumbing Supply Company is a wholesale distributor of plumbing products to building contractors and the trades. The company sells nearly all the parts and tools that plumbing companies need; it also sells to retail customers. Brook Plumbing was started and is owned by two brothers, Sam and David Brook, and has been in business for more than 25 years. The brothers have always managed all significant areas of the business without assistance. Brook's main office and warehouse are located in a medium-sized city. The company also has a branch sales office in a nearby community Freedom purchases plumbing supplies directly from manufacturers' representatives. Since almost all of the products are generic, the Brooks use several different sources. A recent trade checking shows them to be discount-to-prompt with all vendors. Brook Plumbing competes with other local building supply and plumbing wholesalers and hardware stores, and several national chain stores. Brook has built a reputation for meeting the special needs of local contractors and the trade customers who require fast service, credit, and product expertise. Brook's sales representatives will visit building sites with contractors and even help them prepare bids and lay out jobs. Almost all of this work produces sales. This organization has been Brook Plumbing's only financial institution for two years. Brook Plumbing Supply Company, Inc. Part B Brook Plumbing Supply Company, Inc. Balance Sheets (in $000s) As At December 31: 2013 2012 2041 $ $ ASSETS Current assets Cash and equivalents Accounts receivable Inventory Other current assets Total current assets 110 785 1,075 40 2,010 154 770 902 97 885 1,020 44 1,870 2,025 Fixed assets Gross fixed assets Less: Accumulated depreciation Net fixed assets 327 335 117 218 89 238 Other noncurrent assets 95 TOTAL ASSETS $ 2,325 $ 2,200 $ 2,358 473 LIABILITIES AND EQUITY Current liabilities Accounts payable Accrued expenses Other current liabilities Notes payable Current portion-LTD Total current liabilities 136 528 143 551 155 99 91 592 117 486 490 62 68 1,354 1,381 Long-term debt 143 Other noncurrent liabilities 33 Owners' equity 793 636 663 TOTAL LIABILITIES AND EQUITY $ 2,325 $ 2.200 $ 2,358 Brook Plumbing Supply Company, Inc. Part B Brook Plumbing Supply Company, Inc. Income Statements (in $000s) Years Ended December 31: $ $ Sales Cost of goods sold Gross profit 2013 6,504 4,814 1,690 20Y2 5,801 4,258 1,543 2011 5.120 3,661 1,459 901 915 General and administrative expense Selling expense Other expense Profit before taxes 905 417 65 303 387 385 51 108 Provision for income taxes 146 Net Income $ 157 $ 102 $ Brook Plumbing Supply Company, Inc. Monthly Sales (in $000s) $ January February March April May June July August September October November December 2013 405 455 480 496 575 610 615 640 597 543 532 556 2012 398 405 450 455 520 545 570 590 505 459 465 Brook Plumbing Supply Company, Inc. Part C Brook Plumbing Supply Company, Inc. Agings of Accounts Receivable 2013: March 31 June 30 Days from Date of invoice Total Invoices Outstanding Days from Date of Invoice Total Invoices Outstanding 0-30 31-60 61-90 90. Total accounts receivable $ 250,000 310,000 130.000 100.100 0-30 31-60 61-90 90+ Total accounts receivable $ 360,000 330,000 70.000 40.000 $ 800.000 $ 790,100 September 30 December 31 Days from Date of Invoice Days from Date of invoice 0-30 31-60 61-90 90+ Total accounts receivable Total Invoices Outstanding $ 300,000 310,000 125,500 60.000 0-30 31-60 61-90 90+ Total accounts receivable Total Invoices Outstanding $ 345,000 205,000 185.000 50,400 $ 795,500 $ 785.400 Note: Terms are net 60 days. Directions Click the "Case-link" displayed above and use the information provided in Brook Plumbing Supply, to answer this questioni Which of the following describes a reasonable best-case projection scenario for Brook Plumbing and Supply Home Depot suspends plans to open a new store in Brook's city so sales increase 30% Brook's largest supplier successfully negotiates a renewal of its labor contract averting a major strike Zero to five percent growth in new housing starts helps increase sales by 8% Ten to the percent growth in new housing starts helps increase sales by 15% Brook Plumbing Supply Company, Inc. Part A Company Information Brook Plumbing Supply Company is a wholesale distributor of plumbing products to building contractors and the trades. The company sells nearly all the parts and tools that plumbing companies need; it also sells to retail customers. Brook Plumbing was started and is owned by two brothers, Sam and David Brook, and has been in business for more than 25 years. The brothers have always managed all significant areas of the business without assistance. Brook's main office and warehouse are located in a medium-sized city. The company also has a branch sales office in a nearby community Freedom purchases plumbing supplies directly from manufacturers' representatives. Since almost all of the products are generic, the Brooks use several different sources. A recent trade checking shows them to be discount-to-prompt with all vendors. Brook Plumbing competes with other local building supply and plumbing wholesalers and hardware stores, and several national chain stores. Brook has built a reputation for meeting the special needs of local contractors and the trade customers who require fast service, credit, and product expertise. Brook's sales representatives will visit building sites with contractors and even help them prepare bids and lay out jobs. Almost all of this work produces sales. This organization has been Brook Plumbing's only financial institution for two years. Brook Plumbing Supply Company, Inc. Part B Brook Plumbing Supply Company, Inc. Balance Sheets (in $000s) As At December 31: 2013 2012 2041 $ $ ASSETS Current assets Cash and equivalents Accounts receivable Inventory Other current assets Total current assets 110 785 1,075 40 2,010 154 770 902 97 885 1,020 44 1,870 2,025 Fixed assets Gross fixed assets Less: Accumulated depreciation Net fixed assets 327 335 117 218 89 238 Other noncurrent assets 95 TOTAL ASSETS $ 2,325 $ 2,200 $ 2,358 473 LIABILITIES AND EQUITY Current liabilities Accounts payable Accrued expenses Other current liabilities Notes payable Current portion-LTD Total current liabilities 136 528 143 551 155 99 91 592 117 486 490 62 68 1,354 1,381 Long-term debt 143 Other noncurrent liabilities 33 Owners' equity 793 636 663 TOTAL LIABILITIES AND EQUITY $ 2,325 $ 2.200 $ 2,358 Brook Plumbing Supply Company, Inc. Part B Brook Plumbing Supply Company, Inc. Income Statements (in $000s) Years Ended December 31: $ $ Sales Cost of goods sold Gross profit 2013 6,504 4,814 1,690 20Y2 5,801 4,258 1,543 2011 5.120 3,661 1,459 901 915 General and administrative expense Selling expense Other expense Profit before taxes 905 417 65 303 387 385 51 108 Provision for income taxes 146 Net Income $ 157 $ 102 $ Brook Plumbing Supply Company, Inc. Monthly Sales (in $000s) $ January February March April May June July August September October November December 2013 405 455 480 496 575 610 615 640 597 543 532 556 2012 398 405 450 455 520 545 570 590 505 459 465 Brook Plumbing Supply Company, Inc. Part C Brook Plumbing Supply Company, Inc. Agings of Accounts Receivable 2013: March 31 June 30 Days from Date of invoice Total Invoices Outstanding Days from Date of Invoice Total Invoices Outstanding 0-30 31-60 61-90 90. Total accounts receivable $ 250,000 310,000 130.000 100.100 0-30 31-60 61-90 90+ Total accounts receivable $ 360,000 330,000 70.000 40.000 $ 800.000 $ 790,100 September 30 December 31 Days from Date of Invoice Days from Date of invoice 0-30 31-60 61-90 90+ Total accounts receivable Total Invoices Outstanding $ 300,000 310,000 125,500 60.000 0-30 31-60 61-90 90+ Total accounts receivable Total Invoices Outstanding $ 345,000 205,000 185.000 50,400 $ 795,500 $ 785.400 Note: Terms are net 60 days