Income Statement Data Balance Sheet Data Sales Growth Rate Cash Flow Stmt Table 1 Aggregate Income Statement for Paper Industry - Select 6 for year ended December 31st, 2015 Sales Revenues Cash Operating costs Depreciation Total Operating Costs Operating Income (EBIT) Interest Expenses Taxable income Taxes Preferred Dividends Net Income 590,000,000 SOS 040 000 31.270000 $16, 110.000 300.000 7.670.000 Sales Revenues Cash Operating Costs Depreciation Total Operating costs Operating Income (FBIT Interest Expenses Taxable income Table 1 The Paramount Paper Co. Prior 3 year Income Statements 2013 2014 28.255.000 37, 140.000 22.121.450 32.112.400 2.775.000 2 915,000 25.0964501 35027 400 3.158.550 2012,600 325.000 512.000 2.83333501 SEX 600 1,133.420 720.240 TOR 500 136,500 1.59160 30 54.670.000 41 562.900 1511.000 $1.075 900 18 000 2,971,100 27.02.000 Preferred Dividends Net Income 171.500 1611,160 Income Statement Data Balance Sheet Data Sales Growth Rate Cash Flow Stmt Aggregate Balance Sheet for Paper Industry - Select 6 as at December 31st, 2015 Cash Marketable Securities Accounts Receivables Inventories Current Assets Net Fixed Assets Total Assets $87,000 613 000 6.554.000 45.200 32046.800 55.867,200 SI3.200 131,486,800 Table 2 Paramount Paper Inc. Prior 1 year Balance Sheets 20131 396,000 40.000 2,225.000 3,850.000 6,931.000 13.875.000 20,806,000 Cash Marketable Securities Accounts Receivables Inventories Current Assets Net Fixed Assets Total Assets 428,000 540,000 2.325.000 4,950,000 6.013,000 43000 10.996.000 14,976,000 17 56 000 Accounts Payables Accruals Nos Payables Current Liabilities Long Term Debt Total Liabilities Preferred Stock Common Stock Retained Earnings TotalCommon Equity Total Liabilities and Owner's Equity SO,000 3073.600 1.898.400 10.057.000 72.885.000 82 942.000 11.752.000 to $10.000 100,706.000 131 107.000 Accounts Payables Accruals Notes Payables Current Liabilities Long Term Debe Total Liabilities Preferred Stock Common Stock Retained Earnings Total Common Equity Total Liabilities and Owner's Equity 425.000 495.000 150.000 1,070.000 5.250.0001 6,320,000 1,550,000 10.250,000 2.686.000 12916.00 478,000 367,000 180,000 1.225.000 6,714,140 7,939,140 1,950,000 9,500,000 3.629 MO 13.129,860 23.019,000 SIX 000 694.000 175.000 1.187.000 8,985 980 10.172980 10.500.000 15.741,020 20,80 Income Statement Data Balance Sheet Data Sales Growth Rate Cash Flow Stmt Tables Historical Sales for The Paramount Paper Company Year Revenues 2005 25.000 2006 12.450,000 2007 13.246,000 2008 14.250.000 16,275,000 2010 18.235.000 2011 21.234.000 24,345,000 2013 28.255.000 2014 37,340,000 2015 54,670,000 2009 2012 Income Statement Data Balance Sheet Data Sales Growth Rate Cash Flow Stmt Your report should consist of the following: A. Briefly, summarize the key facts of the case, identify the problem, and explain why the problem is important. B. I have provided the case data on a spreadsheet in the Week 2 section in the Weekly Materials and Assignments folder on D2L. Note that in addition to the data provided in the case, I have also included the company's Cash Flow Statement for the years 2014 and 2015. Based on the data and information provided in the case, please respond to the following questions: 1. Comment on the Cash Flow Statements. What insights do they provide? 2. Analyze the firm's liquidity, leverage, turnover and profitability using ratio analysis. (Calculate important ratios and comment on them.) 3. Using common size statements, present an appraisal of the company's performance and financial condition vis--vis its key competitors. 4. Carry out a Du Pont analysis and interpret the results. 5. How much additional sales can the company support without having to add fixed assets? 6. Consider three possible scenarios for the next year: Sales growth is (0) 5%, (1) 15% and (1) 25%. For each of these scenarios, estimate the amount of external capital the firm will have to raise. (Hint: Refer to Section 3.4 in the Ross textbook. You need to provide detailed EFN calculations in a spreadsheet. Clearly state all your assumptions. Keep in mind that the firm is currently operating only at 90% capacity.) 7. Is Warren correct in saying "there is more to us than meets the eye"? If you are Warren, explain how you would attempt to convince the rating agencies that the firm's debt rating should be raised. Income Statement Data Balance Sheet Data Sales Growth Rate Cash Flow Stmt Table 1 Aggregate Income Statement for Paper Industry - Select 6 for year ended December 31st, 2015 Sales Revenues Cash Operating costs Depreciation Total Operating Costs Operating Income (EBIT) Interest Expenses Taxable income Taxes Preferred Dividends Net Income 590,000,000 SOS 040 000 31.270000 $16, 110.000 300.000 7.670.000 Sales Revenues Cash Operating Costs Depreciation Total Operating costs Operating Income (FBIT Interest Expenses Taxable income Table 1 The Paramount Paper Co. Prior 3 year Income Statements 2013 2014 28.255.000 37, 140.000 22.121.450 32.112.400 2.775.000 2 915,000 25.0964501 35027 400 3.158.550 2012,600 325.000 512.000 2.83333501 SEX 600 1,133.420 720.240 TOR 500 136,500 1.59160 30 54.670.000 41 562.900 1511.000 $1.075 900 18 000 2,971,100 27.02.000 Preferred Dividends Net Income 171.500 1611,160 Income Statement Data Balance Sheet Data Sales Growth Rate Cash Flow Stmt Aggregate Balance Sheet for Paper Industry - Select 6 as at December 31st, 2015 Cash Marketable Securities Accounts Receivables Inventories Current Assets Net Fixed Assets Total Assets $87,000 613 000 6.554.000 45.200 32046.800 55.867,200 SI3.200 131,486,800 Table 2 Paramount Paper Inc. Prior 1 year Balance Sheets 20131 396,000 40.000 2,225.000 3,850.000 6,931.000 13.875.000 20,806,000 Cash Marketable Securities Accounts Receivables Inventories Current Assets Net Fixed Assets Total Assets 428,000 540,000 2.325.000 4,950,000 6.013,000 43000 10.996.000 14,976,000 17 56 000 Accounts Payables Accruals Nos Payables Current Liabilities Long Term Debt Total Liabilities Preferred Stock Common Stock Retained Earnings TotalCommon Equity Total Liabilities and Owner's Equity SO,000 3073.600 1.898.400 10.057.000 72.885.000 82 942.000 11.752.000 to $10.000 100,706.000 131 107.000 Accounts Payables Accruals Notes Payables Current Liabilities Long Term Debe Total Liabilities Preferred Stock Common Stock Retained Earnings Total Common Equity Total Liabilities and Owner's Equity 425.000 495.000 150.000 1,070.000 5.250.0001 6,320,000 1,550,000 10.250,000 2.686.000 12916.00 478,000 367,000 180,000 1.225.000 6,714,140 7,939,140 1,950,000 9,500,000 3.629 MO 13.129,860 23.019,000 SIX 000 694.000 175.000 1.187.000 8,985 980 10.172980 10.500.000 15.741,020 20,80 Income Statement Data Balance Sheet Data Sales Growth Rate Cash Flow Stmt Table 5 Historical Sales for The Paramount Paper Company Year Revenues 2005 8,825,000 2006 12,450,000 20071 13,246,000 2008 14,250,000 2009 16.275.000 20101 18,235,000 20111 21,234,000 20121 24,345,000 20131 28,255,000 20141 37,340,000 2015 54,670,000 Income Statement Data Balance Sheet Data Sales Growth Rate Cash Flow Stmt 2014 2015 1.080,380 2.915.000 3,613,000 Paramount Paper Inc. Statement of Cash Flows Net Income Available for Paving Dividends Add Depreciabon Sources of Cash Increase in Accounts Payable Increase in Accruals Uses of Cash Increase in MS 53.000 72,000 40.000 127,000 -80.000 300,000 - 1.100,000 90.000 -1.233.000 1,063.000 Increase in Inventories Operating Cash Flow 2.640,360 3,068,660 Cash Flow From Investments -3.616,000 -6,505,000 Cash Flow From Financing Long-Term Debt Preferred Stock 30,000 1464.140 400,000 -750.000 -136,500 -6.000 2271840 500,000 1.000.000 -171.500 Preferred Dividends Paid Csh Flow From Financing 1,007,640 3,595,340 Change in Cash Beginning Cash Balance Ferra Cash Balance 32,000 396,000 428,000 159.000 428.000 587 000 Income Statement Data Balance Sheet Data Sales Growth Rate Cash Flow Stmt Table 1 Aggregate Income Statement for Paper Industry - Select 6 for year ended December 31st, 2015 Sales Revenues Cash Operating costs Depreciation Total Operating Costs Operating Income (EBIT) Interest Expenses Taxable income Taxes Preferred Dividends Net Income 590,000,000 SOS 040 000 31.270000 $16, 110.000 300.000 7.670.000 Sales Revenues Cash Operating Costs Depreciation Total Operating costs Operating Income (FBIT Interest Expenses Taxable income Table 1 The Paramount Paper Co. Prior 3 year Income Statements 2013 2014 28.255.000 37, 140.000 22.121.450 32.112.400 2.775.000 2 915,000 25.0964501 35027 400 3.158.550 2012,600 325.000 512.000 2.83333501 SEX 600 1,133.420 720.240 TOR 500 136,500 1.59160 30 54.670.000 41 562.900 1511.000 $1.075 900 18 000 2,971,100 27.02.000 Preferred Dividends Net Income 171.500 1611,160 Income Statement Data Balance Sheet Data Sales Growth Rate Cash Flow Stmt Aggregate Balance Sheet for Paper Industry - Select 6 as at December 31st, 2015 Cash Marketable Securities Accounts Receivables Inventories Current Assets Net Fixed Assets Total Assets $87,000 613 000 6.554.000 45.200 32046.800 55.867,200 SI3.200 131,486,800 Table 2 Paramount Paper Inc. Prior 1 year Balance Sheets 20131 396,000 40.000 2,225.000 3,850.000 6,931.000 13.875.000 20,806,000 Cash Marketable Securities Accounts Receivables Inventories Current Assets Net Fixed Assets Total Assets 428,000 540,000 2.325.000 4,950,000 6.013,000 43000 10.996.000 14,976,000 17 56 000 Accounts Payables Accruals Nos Payables Current Liabilities Long Term Debt Total Liabilities Preferred Stock Common Stock Retained Earnings TotalCommon Equity Total Liabilities and Owner's Equity SO,000 3073.600 1.898.400 10.057.000 72.885.000 82 942.000 11.752.000 to $10.000 100,706.000 131 107.000 Accounts Payables Accruals Notes Payables Current Liabilities Long Term Debe Total Liabilities Preferred Stock Common Stock Retained Earnings Total Common Equity Total Liabilities and Owner's Equity 425.000 495.000 150.000 1,070.000 5.250.0001 6,320,000 1,550,000 10.250,000 2.686.000 12916.00 478,000 367,000 180,000 1.225.000 6,714,140 7,939,140 1,950,000 9,500,000 3.629 MO 13.129,860 23.019,000 SIX 000 694.000 175.000 1.187.000 8,985 980 10.172980 10.500.000 15.741,020 20,80 Income Statement Data Balance Sheet Data Sales Growth Rate Cash Flow Stmt Tables Historical Sales for The Paramount Paper Company Year Revenues 2005 25.000 2006 12.450,000 2007 13.246,000 2008 14.250.000 16,275,000 2010 18.235.000 2011 21.234.000 24,345,000 2013 28.255.000 2014 37,340,000 2015 54,670,000 2009 2012 Income Statement Data Balance Sheet Data Sales Growth Rate Cash Flow Stmt Your report should consist of the following: A. Briefly, summarize the key facts of the case, identify the problem, and explain why the problem is important. B. I have provided the case data on a spreadsheet in the Week 2 section in the Weekly Materials and Assignments folder on D2L. Note that in addition to the data provided in the case, I have also included the company's Cash Flow Statement for the years 2014 and 2015. Based on the data and information provided in the case, please respond to the following questions: 1. Comment on the Cash Flow Statements. What insights do they provide? 2. Analyze the firm's liquidity, leverage, turnover and profitability using ratio analysis. (Calculate important ratios and comment on them.) 3. Using common size statements, present an appraisal of the company's performance and financial condition vis--vis its key competitors. 4. Carry out a Du Pont analysis and interpret the results. 5. How much additional sales can the company support without having to add fixed assets? 6. Consider three possible scenarios for the next year: Sales growth is (0) 5%, (1) 15% and (1) 25%. For each of these scenarios, estimate the amount of external capital the firm will have to raise. (Hint: Refer to Section 3.4 in the Ross textbook. You need to provide detailed EFN calculations in a spreadsheet. Clearly state all your assumptions. Keep in mind that the firm is currently operating only at 90% capacity.) 7. Is Warren correct in saying "there is more to us than meets the eye"? If you are Warren, explain how you would attempt to convince the rating agencies that the firm's debt rating should be raised. Income Statement Data Balance Sheet Data Sales Growth Rate Cash Flow Stmt Table 1 Aggregate Income Statement for Paper Industry - Select 6 for year ended December 31st, 2015 Sales Revenues Cash Operating costs Depreciation Total Operating Costs Operating Income (EBIT) Interest Expenses Taxable income Taxes Preferred Dividends Net Income 590,000,000 SOS 040 000 31.270000 $16, 110.000 300.000 7.670.000 Sales Revenues Cash Operating Costs Depreciation Total Operating costs Operating Income (FBIT Interest Expenses Taxable income Table 1 The Paramount Paper Co. Prior 3 year Income Statements 2013 2014 28.255.000 37, 140.000 22.121.450 32.112.400 2.775.000 2 915,000 25.0964501 35027 400 3.158.550 2012,600 325.000 512.000 2.83333501 SEX 600 1,133.420 720.240 TOR 500 136,500 1.59160 30 54.670.000 41 562.900 1511.000 $1.075 900 18 000 2,971,100 27.02.000 Preferred Dividends Net Income 171.500 1611,160 Income Statement Data Balance Sheet Data Sales Growth Rate Cash Flow Stmt Aggregate Balance Sheet for Paper Industry - Select 6 as at December 31st, 2015 Cash Marketable Securities Accounts Receivables Inventories Current Assets Net Fixed Assets Total Assets $87,000 613 000 6.554.000 45.200 32046.800 55.867,200 SI3.200 131,486,800 Table 2 Paramount Paper Inc. Prior 1 year Balance Sheets 20131 396,000 40.000 2,225.000 3,850.000 6,931.000 13.875.000 20,806,000 Cash Marketable Securities Accounts Receivables Inventories Current Assets Net Fixed Assets Total Assets 428,000 540,000 2.325.000 4,950,000 6.013,000 43000 10.996.000 14,976,000 17 56 000 Accounts Payables Accruals Nos Payables Current Liabilities Long Term Debt Total Liabilities Preferred Stock Common Stock Retained Earnings TotalCommon Equity Total Liabilities and Owner's Equity SO,000 3073.600 1.898.400 10.057.000 72.885.000 82 942.000 11.752.000 to $10.000 100,706.000 131 107.000 Accounts Payables Accruals Notes Payables Current Liabilities Long Term Debe Total Liabilities Preferred Stock Common Stock Retained Earnings Total Common Equity Total Liabilities and Owner's Equity 425.000 495.000 150.000 1,070.000 5.250.0001 6,320,000 1,550,000 10.250,000 2.686.000 12916.00 478,000 367,000 180,000 1.225.000 6,714,140 7,939,140 1,950,000 9,500,000 3.629 MO 13.129,860 23.019,000 SIX 000 694.000 175.000 1.187.000 8,985 980 10.172980 10.500.000 15.741,020 20,80 Income Statement Data Balance Sheet Data Sales Growth Rate Cash Flow Stmt Table 5 Historical Sales for The Paramount Paper Company Year Revenues 2005 8,825,000 2006 12,450,000 20071 13,246,000 2008 14,250,000 2009 16.275.000 20101 18,235,000 20111 21,234,000 20121 24,345,000 20131 28,255,000 20141 37,340,000 2015 54,670,000 Income Statement Data Balance Sheet Data Sales Growth Rate Cash Flow Stmt 2014 2015 1.080,380 2.915.000 3,613,000 Paramount Paper Inc. Statement of Cash Flows Net Income Available for Paving Dividends Add Depreciabon Sources of Cash Increase in Accounts Payable Increase in Accruals Uses of Cash Increase in MS 53.000 72,000 40.000 127,000 -80.000 300,000 - 1.100,000 90.000 -1.233.000 1,063.000 Increase in Inventories Operating Cash Flow 2.640,360 3,068,660 Cash Flow From Investments -3.616,000 -6,505,000 Cash Flow From Financing Long-Term Debt Preferred Stock 30,000 1464.140 400,000 -750.000 -136,500 -6.000 2271840 500,000 1.000.000 -171.500 Preferred Dividends Paid Csh Flow From Financing 1,007,640 3,595,340 Change in Cash Beginning Cash Balance Ferra Cash Balance 32,000 396,000 428,000 159.000 428.000 587 000