Hi, there are 6 questions that need to be answered. All of them are described in the word and excel file. Attached PDF file has a lot of relevant information as well. Thanks!

Let's Buy It!!!!! Imagine that you are sitting in front of your big screen TV watching the Packers maul the Seahawks on a beautiful January Sunday afternoon in Lambeau Field. The Packers have a 16-0 lead in the fourth quarter, and the Seahawk offense is as lively as a deflated football. Suddenly, your cell phone rings. You instinctively think that no Packer fan would call you during the game, and you're right. It's your brotherin-law who doesn't even know the Packers play football. You reluctantly answer the phone and ask if there is an emergency or a life threatening situation. If not, you explain you're watching the Packers, and ask if you can return the call at the end of the game. Later, you return the call and your brother-in-law excitedly tells you about a manufacturing company for sale. He informs you that he is meeting with the seller the next morning, and he wants your opinion on the financial statements this afternoon. He emails you relevant sections of the sales prospectus document for your review. Those sections are attached to the case instructions. You quickly look at the financial statements and see the net value of the business approximates $27 million. Since you know your brother-in-law is broke, you politely ask him how he plans to finance the acquisition. He responds that he is planning to borrow 100% of the purchase price. He adds that he has a business contact that is willing to give him a loan at 8% annual interest. He thinks he can buy the business for $40 million. Your brother-in-law tells you his strategy is to buy the business and allow the current management team to run the daily operations. Since your brother-in-law will own 100% of the business, all the profits will belong to him. What could be easier!! Your brother-in-law noted that the current management team has been in place for 24 years. Therefore, they should know the industry and provide a level of management competence your brother-in-law does not possess. When your brother-in-law can no longer control his excitement, he suggests that maybe you would like to be his partner and invest in the new business!!! Other key facts you learn from your brother-in-law that you need for your analysis are as follows: The business for sale is a division of a large public company. You are familiar with this company and know that the company has a great reputation. Its corporate executives are very sharp business professionals. The business for sale does not have its own accounting function. All financial transactions were recorded in the corporate office shared service center. Other shared functions included human resources, information technology, and legal counsel. The financial information provided to you does not include any estimate for costs associated with those functions. You estimate the value of the aforementioned shared administrative functions approximates $1,250,000 more than the amounts presented on the caption \"corporate allocations\". Your brother-in-law wants to be compensated for the risk he is taking and feels a management fee of $500,000 is reasonable. Assignment: 1. Review the financial information provided. You need to perform a financial statement ratio analysis of the 2014 numbers. The ratios you should calculate address the following categories: a. Growth, b. Profitability, c. Asset Efficiency. (Hint: dust off your ACCT 2050 book for a sample of applicable ratios). The output of your analysis should be a schedule with at least 6 ratios. You then need to interpret the ratios. Hint: There is no need to explain how to calculate each ratio. You do need to explain what the ratio says about the company's performance and whether the company is performing well or poorly. I would expect you are able to write a paragraph about each ratio category. 2. The division was officially placed for sale in 2014. What evidence can you find from the information provided that corporate management decided several years prior to 2014 to dispose of this operation? 3. Review the operating projections included in the case. a. What problems can you find with the estimated numbers and assumptions used in the forecast for the years beyond 2014. b. Prepare a revised projection for 2015 reflecting your adjustments for the problems you found in your response to 3a. and estimates for interest expenses and the cost of administrative functions previously performed by the corporate office. 4. Your brother-in-law said he will agree to pay the asking price of $40 million. However, you tell him he will need to borrow more money. How much will he need to borrow in addition to the $40 million in order to operate the business? In other words, explain why borrowing $40 million is insufficient. 5. A. The lender of $40 million will want the loan repaid in seven years. You are to prepare a high level cash flow forecast FOR THE YEAR 2015 ONLY. (DO NOT PREPARE MORE THAN ONE YEAR. IT IS NOT NECESSARY.) B. Based on your 2015 income forecast (see question 6) and 2015 cash flow forecast, will there be enough leftover cash to begin repaying the loan in year 1? C. If the repayments could not begin in year 1, then could the borrowings be repaid within seven years? NOTE: Seven years is a standard period for leveraged buyout debt repayments). 6. After you prepare the forecast, prepare a response to your brother-in-law summarizing your assessment of the financial information provided. As part of your response, you should also comment on your brother-in-law's strategy regarding current management at the division. All of your responses should be typed on the Excel document provided. Supporting calculations should be included in your Excel workbook. Responses without support will not receive credit. Your advice should be supported by the facts mentioned in the narrative above and the information obtained through your analysis of the financial data provided. Think CRITICALLY during your analysis of the numbers. Name ACCT 3150 Let's Buy It!!! Calculate the financial ratios based on 2014 amounts (at least two per category) and discuss your findings below GROWTH PROFITABILITY ASSET EFFICIENCY Discussion Name ACCT 3150 Let's Buy It!!! Carefully review the content of the sales document. What evidence can you find that indicates the owner decided to sell this business long before 2014? Name ACCT 3150 Let's Buy It!!! Carefully review the content of the income statement forecasts for future years. Apply a critical eye to the forecasted numbers. Describe examples of errors you found with the forecast assumptions. Name ACCT 3150 Let's Buy It!!! ADJUSTED 2015 INCOME STATEMENT Name ACCT 3150 Let's Buy It!!! The $40 million purchase price allows you to get the keys to the factory and office. Once your brother-in-law buys the business, he will need to operate it. You need to carefully review the balance sheet and income statements. Apply a critical eye to the balance sheet and determine the additional amount of money that will need to be borrowed in order to operate the business Initial amount of borrowings based on purchase price $ 40,000,000 Additional borrowings required to operate the business Total borrowings required Interest rate Annual interest cost Explain how you determined the amount of additional borrowings: 8% Name ACCT 3150 Let's Buy It!!! Use the income statement information from your answer to the prior question as a beginning of your projected cash flow statement. Based on the expected cash flow generated by this business in the first year of new ownership. Do you believe the loan could be repaid in seven years if the company continued to generate the same level a of cash flow that you project for year 1? Name ACCT 3150 Let's Buy It!!! Your brother-in-law admits he is not able to run the business, but he would like curent management to continue in their positions. Use the financial information from your answers to determine whether to keep or replace the current management team. Make sure to explain the reasoning supporting your