Model Inputs and Assumptions Al Figures in US$000's unless otherwise stated. Model Inputs and Assumptions General Assumptions Forecast Scenario Days Per Year 365 Base Case Capital Assumptions Asset Salvage Value (% of Capital Addition) Asset Useful Life 15% 10 Years! 2020 2021E 2022E 2023E 2024E 2025E Income Statement Sales Revenue Cost of Sales Gross Profit $50,000 ($22,500) $27,500 $0 $0 $0 $0 SG&A Expense Depreciation Expense Interest Expense Income Before Income Taxes Income Taxes Net Income ($5,000) ($8,500) $0 $14,000 ($3,500) $10,500 $0 $0 $0 $0 $0 Balance Sheet Assets Cash & Cash Equivalents Accounts Receivable Total Current Assets $194,000 $5,000 $199,000 $0 $0 $0 Property, Plant & Equipment Total Assets $91,500 $290,500 $0 $0 $0 $0 Liabilities Accounts Payable Total Current Liabilities $5,000 $5,000 $0 $0 $0 $0 $0 Long-Term Debt Total Liabilities $150,000 $155,000 $0 $0 $0 $0 Shareholders' Equity Share Capital Retained Eamings Total Shareholders' Equity Total Liabilities and Shareholders' Equity $125,000 $10,500 $135,500 $290,500 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 2020 2021E 2022E 2023E 2024E 2025E $10,500 Cash Flow Statement Operating Activities Net Income Adjustments For Depreciation Expense Changes in Non-Cash Working Capital Cash Generated From Operating Activities $8,500 $0 $19,000 $0 $0 $0 $0 $0 Investing Activities Additions to Property, Plant & Equipment Cash (Used For) Investing Activities ($100,000) ($100,000) $0 $0 $0 $0 $0 Financing Activities Issuance (Repayment) of Debt Issuance (Buy-back) of Equity Cash (Used For) Generated From Financing Activities $150,000 $125,000 $275,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Cash (Used) Generated in the Period Cash & Cash Equivalents, Beginning of Period Cash & Cash Equivalents, End of Period $194,000 $0 $194,000 $0 $0 $0 $0 $0 2021E 2022E 2023E 2024E 2025E Live Case Income Statement Assumptions Annual Sales Growth Cost of Sales 1% of Sales) SG&A Expense 1% of Sales) Interest Rate Effective Tax Rate Balance Sheet Assumptions Accounts Receivable (Days) Accounts Payable (Days) Capital Expenditures Equity Issued (Repaid) Scenario Inputs Base Case Income Statement Assumptions Annual Sales Growth (2) Cost of Sales (% of Sales) SG8A Expense (% of Sales) 6.07 40.0% 10.07 6.07 40.0% 10.02 6.07 40.02 10.0% 6.02 40.02 10.02 6.07. 40.02 10.0% 5.07 Interest Rate Effective Tax Rate 5.02 25.02 5.02 25.0% 5.0% 25.0% 5.02 25.0% 25.024 Balance Sheet Assumptions Accounts Receivable (Days) Accounts Payable (Days) Capital Expenditures Equity Issued (Repaid) $20,000 $20,000 $20,000 $20,000 $20,000 $0 $0 $0 Low Case Income Statement Assumptions Annual Sales Growth Cost of Sales (% of Sales) SG&A Expense 1% of Sales) 3.0% 45.0% 15.02 3.0/ 45.02 15.0% 302 45.0% 15 02 3.0% 45.0% 15 m2 45.0% 15.02 Interest Rate Effective Tax Rate 5.0% 25.02 5.0% 25.0%. 5.0% 25.0% 5.07. 25.0% 5.0% 25.02 Low Case Income Statement Assumptions Annual Sales Growth Cost of Sales (% of Sales) SG&A Expense 1% of Sales) 3.02 3.0% 3.02 45.0% 3.02 45.0% 15.07 45.0% 15.07 45.0% 3.0% 45.0% 15.0% 15.07 15.0% Interest Rate Effective Tax Rate 5.02 25.02 5.02 25.0% 5.02 25.02 5.02 25.0% 5.02 25.02 Balance Sheet Assumptions Accounts Receivable (Days) Accounts Payable (Days) Capital Expenditures Equity Issued (Repaid) $15,000 $0 $15,000 $15,000 $15,000 $0 $15,000 $0 High Case Income Statement Assumptions Annual Sales Growth Cost of Sales (% of Sales) SG&A Expense (% of Sales) 8.0% 8.07 8.0% 30.0% 8.07 8.0% 30.0% 8.07 30.0% 30.0% 8.0% 30.07. 8.0% 8.0% 8.02 Interest Rate Effective Tax Rate 5.02 25.02 5.0% 25.02 5.0% 25.0% 5.07 25.0% 5.0% 25.07 Balance Sheet Assumptions Accounts Receivable (Days) Accounts Payable (Days) Capital Expenditures Equity Issued (Repaid) $30.000 $30,000 $0 $30.000 $0 $30,000 $0 StartupCo commenced operations at the beginning of 2020. $125 million of equity was raised to fund the purchase of equipment as well as for general corporate purposes. As part of its business planning process, a 5-year forecast was developed (Base Case) as well as upside and downside scenarios (High and Low Cases, respectively). At the end of 2020, StartupCo issued $150 million of 5-year debt, repayable in equal annual installments at the end of each year, to finance its future capital program. 4 Using the High Case, calculate the debt balance at the end of 2022E. Review Later $90,000 $150,000 $120,000 $0 Model Inputs and Assumptions Al Figures in US$000's unless otherwise stated. Model Inputs and Assumptions General Assumptions Forecast Scenario Days Per Year 365 Base Case Capital Assumptions Asset Salvage Value (% of Capital Addition) Asset Useful Life 15% 10 Years! 2020 2021E 2022E 2023E 2024E 2025E Income Statement Sales Revenue Cost of Sales Gross Profit $50,000 ($22,500) $27,500 $0 $0 $0 $0 SG&A Expense Depreciation Expense Interest Expense Income Before Income Taxes Income Taxes Net Income ($5,000) ($8,500) $0 $14,000 ($3,500) $10,500 $0 $0 $0 $0 $0 Balance Sheet Assets Cash & Cash Equivalents Accounts Receivable Total Current Assets $194,000 $5,000 $199,000 $0 $0 $0 Property, Plant & Equipment Total Assets $91,500 $290,500 $0 $0 $0 $0 Liabilities Accounts Payable Total Current Liabilities $5,000 $5,000 $0 $0 $0 $0 $0 Long-Term Debt Total Liabilities $150,000 $155,000 $0 $0 $0 $0 Shareholders' Equity Share Capital Retained Eamings Total Shareholders' Equity Total Liabilities and Shareholders' Equity $125,000 $10,500 $135,500 $290,500 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 2020 2021E 2022E 2023E 2024E 2025E $10,500 Cash Flow Statement Operating Activities Net Income Adjustments For Depreciation Expense Changes in Non-Cash Working Capital Cash Generated From Operating Activities $8,500 $0 $19,000 $0 $0 $0 $0 $0 Investing Activities Additions to Property, Plant & Equipment Cash (Used For) Investing Activities ($100,000) ($100,000) $0 $0 $0 $0 $0 Financing Activities Issuance (Repayment) of Debt Issuance (Buy-back) of Equity Cash (Used For) Generated From Financing Activities $150,000 $125,000 $275,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Cash (Used) Generated in the Period Cash & Cash Equivalents, Beginning of Period Cash & Cash Equivalents, End of Period $194,000 $0 $194,000 $0 $0 $0 $0 $0 2021E 2022E 2023E 2024E 2025E Live Case Income Statement Assumptions Annual Sales Growth Cost of Sales 1% of Sales) SG&A Expense 1% of Sales) Interest Rate Effective Tax Rate Balance Sheet Assumptions Accounts Receivable (Days) Accounts Payable (Days) Capital Expenditures Equity Issued (Repaid) Scenario Inputs Base Case Income Statement Assumptions Annual Sales Growth (2) Cost of Sales (% of Sales) SG8A Expense (% of Sales) 6.07 40.0% 10.07 6.07 40.0% 10.02 6.07 40.02 10.0% 6.02 40.02 10.02 6.07. 40.02 10.0% 5.07 Interest Rate Effective Tax Rate 5.02 25.02 5.02 25.0% 5.0% 25.0% 5.02 25.0% 25.024 Balance Sheet Assumptions Accounts Receivable (Days) Accounts Payable (Days) Capital Expenditures Equity Issued (Repaid) $20,000 $20,000 $20,000 $20,000 $20,000 $0 $0 $0 Low Case Income Statement Assumptions Annual Sales Growth Cost of Sales (% of Sales) SG&A Expense 1% of Sales) 3.0% 45.0% 15.02 3.0/ 45.02 15.0% 302 45.0% 15 02 3.0% 45.0% 15 m2 45.0% 15.02 Interest Rate Effective Tax Rate 5.0% 25.02 5.0% 25.0%. 5.0% 25.0% 5.07. 25.0% 5.0% 25.02 Low Case Income Statement Assumptions Annual Sales Growth Cost of Sales (% of Sales) SG&A Expense 1% of Sales) 3.02 3.0% 3.02 45.0% 3.02 45.0% 15.07 45.0% 15.07 45.0% 3.0% 45.0% 15.0% 15.07 15.0% Interest Rate Effective Tax Rate 5.02 25.02 5.02 25.0% 5.02 25.02 5.02 25.0% 5.02 25.02 Balance Sheet Assumptions Accounts Receivable (Days) Accounts Payable (Days) Capital Expenditures Equity Issued (Repaid) $15,000 $0 $15,000 $15,000 $15,000 $0 $15,000 $0 High Case Income Statement Assumptions Annual Sales Growth Cost of Sales (% of Sales) SG&A Expense (% of Sales) 8.0% 8.07 8.0% 30.0% 8.07 8.0% 30.0% 8.07 30.0% 30.0% 8.0% 30.07. 8.0% 8.0% 8.02 Interest Rate Effective Tax Rate 5.02 25.02 5.0% 25.02 5.0% 25.0% 5.07 25.0% 5.0% 25.07 Balance Sheet Assumptions Accounts Receivable (Days) Accounts Payable (Days) Capital Expenditures Equity Issued (Repaid) $30.000 $30,000 $0 $30.000 $0 $30,000 $0 StartupCo commenced operations at the beginning of 2020. $125 million of equity was raised to fund the purchase of equipment as well as for general corporate purposes. As part of its business planning process, a 5-year forecast was developed (Base Case) as well as upside and downside scenarios (High and Low Cases, respectively). At the end of 2020, StartupCo issued $150 million of 5-year debt, repayable in equal annual installments at the end of each year, to finance its future capital program. 4 Using the High Case, calculate the debt balance at the end of 2022E. Review Later $90,000 $150,000 $120,000 $0