I ONLY NEED QUESTIONS 5 and 6 ANSWERED

I ONLY NEED QUESTIONS 5 AND 6 ANSWERED THANK YOU

10:59 1 LTE Done 2 of 5 X Cases in Finance... 5 Financial Analysis and Forecasting There's More to Us Than Meets the Eye "Greg, the board of directors' meeting is scheduled two weeks from today and I'm depending on you to come up with a realistic and honest appraisal of our company's position," said Warren, to his assistant Greg Chapman "I'm sure that there's more to us than meets the eye!" he quipped. "But those darn analysts are still punishing us for Robert's accounting jugglery he said with a frown. Why don't you prepare a detailed financial performance analysis of the firm for the most recent three years, complete with industry comparisons and a DuPont analysis? It will help me make the case to the rating agencies that they need to raise our rating. After that, I'd like you to prepare a 12-month pro-forma forecast us- ing a scenario analysis. Use our current average compound growth rate in sales as the base estimate and vary that up and down by 10% for the best case and worst-case scenarios respectively. This will help us figure out to have to acquire over the next year. The production folks tell me that we are currently operating at 90% of capacity, so we should be able to support some growth without additional how much additional funds we are going plant and equipment." he added looking rather stressed. Warren Badges, the new CFO of Paramount Paper Inc., was hired last year to replace Robert Malnight. Robert was fired because the firm had come under Federal investigation for noncompliance of the Sarbanes-Oxley 10:59 1 LTE Done 4 of 5 Case5 There's More to Us Than Meets the Eye 23 Table 1 Paramount Paper Inc. Prior 3-Year Income Statements 2013 2014 37,340000 32,112400 2,915,000 35,027400 2015 54,670,000 47.562,900 3,513,000 1,075,900 3,594,100 Sales Revenues 28.255.000 22,321450 2,775,000 25,096.450 3,158,550 Cash Operating Costs Total Operating Costs Operating Income (EBIT 2,312,600 Interest Expenses Taxable Income Taxes Preferred Dividends Net Income 325.000 2,833.550 1,133.420 108,500 1,591,630 512000 1,800,600 720240 136,500 943860 623,000 2,971,100 1,188,440 171,500 1,611,160 Table 2 Paramount Paper Inc. Prior 3-Year Balance Sheets 2013 396,000.00 460,000.00 2014 2015 28,000.00 587,000.00 638,000.00 2,225,000.002,525.000.00 3,758,000.00 4950,000.00 6,013,000.00 8,443.000.00 10,996,000.00 13,875,000.00 14576,000.00 17568,000.00 20,806.000.00 23019,000.00 28,564,000.00 Cash Marketable Securities Accounts Receivables 540,000.00 3,850,000.00 6931,000.00 Current Assets Net Fixed Assets Total Assets 518,000.00 694,000.00 75,000.00 Accounts Payables 425,000.00 495,000.00 150,000.00 1,070,000.00 5.250,000.00 478,000.00 51 567,000.00 Notes Payables Current Liabilities Long Term Debt Total Liabilities Preferred Stock Common Stock Retained Earnings Total Common Equity Total Liabilities and Owners 180,000.00 1225,000.00 1387,000.00 6,714,140.00 8,985,980.00 6,320,000.00 7939,140.00 10,372,980.00 1,550,000.001,950,000.00 2.450,000.00 10.250,000.00 9.500,000.00 10,500,000.00 2,686,000.00 3,629,860.00 5241,020.00 12.936,000.00 3,129,860.00 15,741.020.00 Equity 20,806,000.00 23019,000.00 28,564,000.00 10:59 LTE Done 5 of 5 Cases in Finance.. Case 5 There's More to Us Than Meets the Eye Table 3 Aggregate Income Statement for Paper Industry- 24 Select 6 for Year Ended December 31, 2015 Sales Revenues 590,000,000 Cash Operating Costs Total Operating Costs Operating Income (EBIT) Interest Expenses Taxable Income Taxes Preferred Dividends Net Income 31,270,000 536,310,000 53,690,000 7670,000 46,020,000 18,408,000 590,000 27,022,000 Table 4 Aggregate Balance Sheet for Paper Industry Select 6 As of December 31, 2015 Cash Marketable Securities Accounts Receivables 6,554,000.00 5,200.00 32,046,800.00 5,867,200.00 94,513,200.00 131.486,800.00 226,000,000.00 Current Assets Net Fixed Assets Total Assets Accounts Payables Accruals Notes Payables Current Liabilities Long Term Debt Total Liabilities Preferred Stock Common Stock Retained Earnings Total Common Equity Total Liabilities and Owner's Equity 5,085,000.00 3,073,600.00 1 ,898, 400 00 10.057,000.00 72,885,000.00 82.942,000.00 1,752,000.00 0.510,000.00 100,796,000.00 131,306,000.00 226,000,000.00 10:59 1 LTE Done 1 of 5 Case 5 X Cases in Finance.. Year Revenues 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 8,825,000 2.450,000 13,246,000 14,250,000 16,275,000 18,235,000 21,234,000 24,345,000 28,255,000 37,340,000 54,670,000 Questions: 1. Using a cash flow statement for the most recent year, explain how Greg would sum up the company's cash position. 2. Analyze the firm's liquidity, leverage, turmover, and profitability using ratio analysis. 3. Using common size statements, help Greg present an appraisal of the company's performance and financial condition vis--vis its key competitors . What would Greg discover after performing a DuPont Analy- sis on the company's key profitability ratios? 5. How much additional sales can the company support without having to add fixed assets? 6. Will Paramount Paper have to raise external capital over the next 12 months? If so how much? If not, why not? 7. Is Warren correct in saying "there is more to us than meets the eye"? Explairn. 8. If you are Warren, explain how you would attempt to convince the rating agencies that the firm's debt rating should be raised. 10:59 1 LTE Done 2 of 5 X Cases in Finance... 5 Financial Analysis and Forecasting There's More to Us Than Meets the Eye "Greg, the board of directors' meeting is scheduled two weeks from today and I'm depending on you to come up with a realistic and honest appraisal of our company's position," said Warren, to his assistant Greg Chapman "I'm sure that there's more to us than meets the eye!" he quipped. "But those darn analysts are still punishing us for Robert's accounting jugglery he said with a frown. Why don't you prepare a detailed financial performance analysis of the firm for the most recent three years, complete with industry comparisons and a DuPont analysis? It will help me make the case to the rating agencies that they need to raise our rating. After that, I'd like you to prepare a 12-month pro-forma forecast us- ing a scenario analysis. Use our current average compound growth rate in sales as the base estimate and vary that up and down by 10% for the best case and worst-case scenarios respectively. This will help us figure out to have to acquire over the next year. The production folks tell me that we are currently operating at 90% of capacity, so we should be able to support some growth without additional how much additional funds we are going plant and equipment." he added looking rather stressed. Warren Badges, the new CFO of Paramount Paper Inc., was hired last year to replace Robert Malnight. Robert was fired because the firm had come under Federal investigation for noncompliance of the Sarbanes-Oxley 10:59 1 LTE Done 4 of 5 Case5 There's More to Us Than Meets the Eye 23 Table 1 Paramount Paper Inc. Prior 3-Year Income Statements 2013 2014 37,340000 32,112400 2,915,000 35,027400 2015 54,670,000 47.562,900 3,513,000 1,075,900 3,594,100 Sales Revenues 28.255.000 22,321450 2,775,000 25,096.450 3,158,550 Cash Operating Costs Total Operating Costs Operating Income (EBIT 2,312,600 Interest Expenses Taxable Income Taxes Preferred Dividends Net Income 325.000 2,833.550 1,133.420 108,500 1,591,630 512000 1,800,600 720240 136,500 943860 623,000 2,971,100 1,188,440 171,500 1,611,160 Table 2 Paramount Paper Inc. Prior 3-Year Balance Sheets 2013 396,000.00 460,000.00 2014 2015 28,000.00 587,000.00 638,000.00 2,225,000.002,525.000.00 3,758,000.00 4950,000.00 6,013,000.00 8,443.000.00 10,996,000.00 13,875,000.00 14576,000.00 17568,000.00 20,806.000.00 23019,000.00 28,564,000.00 Cash Marketable Securities Accounts Receivables 540,000.00 3,850,000.00 6931,000.00 Current Assets Net Fixed Assets Total Assets 518,000.00 694,000.00 75,000.00 Accounts Payables 425,000.00 495,000.00 150,000.00 1,070,000.00 5.250,000.00 478,000.00 51 567,000.00 Notes Payables Current Liabilities Long Term Debt Total Liabilities Preferred Stock Common Stock Retained Earnings Total Common Equity Total Liabilities and Owners 180,000.00 1225,000.00 1387,000.00 6,714,140.00 8,985,980.00 6,320,000.00 7939,140.00 10,372,980.00 1,550,000.001,950,000.00 2.450,000.00 10.250,000.00 9.500,000.00 10,500,000.00 2,686,000.00 3,629,860.00 5241,020.00 12.936,000.00 3,129,860.00 15,741.020.00 Equity 20,806,000.00 23019,000.00 28,564,000.00 10:59 LTE Done 5 of 5 Cases in Finance.. Case 5 There's More to Us Than Meets the Eye Table 3 Aggregate Income Statement for Paper Industry- 24 Select 6 for Year Ended December 31, 2015 Sales Revenues 590,000,000 Cash Operating Costs Total Operating Costs Operating Income (EBIT) Interest Expenses Taxable Income Taxes Preferred Dividends Net Income 31,270,000 536,310,000 53,690,000 7670,000 46,020,000 18,408,000 590,000 27,022,000 Table 4 Aggregate Balance Sheet for Paper Industry Select 6 As of December 31, 2015 Cash Marketable Securities Accounts Receivables 6,554,000.00 5,200.00 32,046,800.00 5,867,200.00 94,513,200.00 131.486,800.00 226,000,000.00 Current Assets Net Fixed Assets Total Assets Accounts Payables Accruals Notes Payables Current Liabilities Long Term Debt Total Liabilities Preferred Stock Common Stock Retained Earnings Total Common Equity Total Liabilities and Owner's Equity 5,085,000.00 3,073,600.00 1 ,898, 400 00 10.057,000.00 72,885,000.00 82.942,000.00 1,752,000.00 0.510,000.00 100,796,000.00 131,306,000.00 226,000,000.00 10:59 1 LTE Done 1 of 5 Case 5 X Cases in Finance.. Year Revenues 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 8,825,000 2.450,000 13,246,000 14,250,000 16,275,000 18,235,000 21,234,000 24,345,000 28,255,000 37,340,000 54,670,000 Questions: 1. Using a cash flow statement for the most recent year, explain how Greg would sum up the company's cash position. 2. Analyze the firm's liquidity, leverage, turmover, and profitability using ratio analysis. 3. Using common size statements, help Greg present an appraisal of the company's performance and financial condition vis--vis its key competitors . What would Greg discover after performing a DuPont Analy- sis on the company's key profitability ratios? 5. How much additional sales can the company support without having to add fixed assets? 6. Will Paramount Paper have to raise external capital over the next 12 months? If so how much? If not, why not? 7. Is Warren correct in saying "there is more to us than meets the eye"? Explairn. 8. If you are Warren, explain how you would attempt to convince the rating agencies that the firm's debt rating should be raised