Nates 20208 10,929 12,022 Business Revenues is driven by the growth rate Gross Profits is calculated as Revenues multiplied by Gross Margin ul. OoFx is calculated as Revenues multiplied by Opex Percent Revenues EBIT is cakulated as Gross Profits minus Operating Expenses (Opex! Interest Income is cakulated as Interest Rate multiplied by Cash (as there is no Debt) Pretax income is calculated as EBIT plus Net Interest Income Expenses Takes is calculated as Pretax Profits multiplied by Tax Rate 55 2018 2019 2020 Relationship 56 Income Statement 57 Revenues 5B Growth Rate 10% 10% Driver 59 Cost of Revenues 5,557 7,333 Accounting 60 Gross Profits Business 61 Gross Margin OX Driver 62 Operating Expenses (Opex! 1500 1700 Business 63 OpEx Percent of Revenues OX Driver 64 EBIT Accounting 65 Net interest Income (Expense) 65 55 NA 66 interest Rate 5% 5% 5% Driver 67 Pretax income Accountine 68 Taxes Business 69 Tax Rate 0% Driver 70 Net Income 71 72 Balance Sheet 73 Cash 1,292 Accounting 74 Accounts Receivable 1,500 1,600 75 Days of Sales Outstanding (DSO) 76 PPBE 15,092 Accounting 77 Accounts Payable 1,000 1,200 Business 78 Days of Payables Outstanding (DPO) Driver 79 Equity 12,500 80 81 Hints for Working on the Cash Flow Statement 82 Cash Flow Statements always aggregate (sum up) all the inflows and Outflows of Cash Flow during a period. 83 Inflaws of Cash are positive numbers and Outflows of Cash are negative numbers on the Cash Flow Statement 84 To help you, we show the Outflows in Italks. 85 You should remember that increases in Assets, actually decrease Cash so you are subtracting an increase 86 In contrast, increases in Liabilities, Debt and Equity increase Cash so you are adding an increase 87 Capital Expenditures (CapEx) are investments of Cash and an Outflow of Cash on the Cash Flow Statement 88 As an investment, CapEx isn't less than zero, but it is shown as a negative number because it is an Outflow. 89 Dividends are an Outflow of Cash and also shown as a negative number, but Dividends are never less than zero 90 91 Cash Flow Statement 92 Net Income Accounting 93 Depreciation 1,509 Accounting 94 - Increase in Accounts Receivable 95 + Increase in Accounts Payable Accounting 96 Capital Expenditures (Capex) (800) () (1,000) ( (1,000) Accounting 97 Diwdends Accounting 98 Payout Ratio Business 99 = Increase Decrease) in Cash 709 Accounting 100 Cash is previous year Cash plus Increase Decrease) in Cash Accounts Receivable is calculated as Revenues multiplied by Days of Sales Outstanding (DSO)/365 Days of Sales Outstanding (DSO) is calculated as Accounts Receivable/ Revenues 365 PP&E in a year is calculated as PP&E in the previous year plus CapEx in the current year minus Depreciation in the current year Accounts Payable is calculated as Cost of Revenues multiplied by Days of Payables Outstanding (DPO)/365 Days of Payables Outstanding (DPO) is calculated as Accounts Payable/Cost of Revenues 365 Equity in a year is calculated as Equity in the previous year plus Net Income minus Dividends ALERT: Because the value of the Dividends are shown as a negative on the Cash Flow Statement the value should be added to subtract Dividends The company uses 10-year straight line depreciation (10% of PP&E in the previous year! Minus the increase in Accounts Receivable (the Accounts Receivable in the current year minus that in the previous year) Increase in Accounts Payable (the Accounts Payable in the current year minus that in the previous year! Dividends is the negative of the Net Income multiplied by Payout Ratio Screenshot Notes Revenues is driven by the growth rate 6.557 Gross Profits is calculated as Revenues multiplied by Gross Margin OpEx is calculated as Revenues multiplied by OpEx Percent Revenues EBIT is calculated as Gross Profits minus Operating Expenses (Opex Interest Income is calculated as Interest Rate multiplied by Cash (as there is no Debt) Pretax income is calculated as EBIT plus Net Interest Income (Expenses) Taxes is calculated as Pretax Profits multiplied by Tax Rate 53 Errors in the model will turn red. The exercise is designed such that an error early in the assignment will not adversely impact later grading 54 55 2018 2019 2020E Relationship 56 Income Statement 57 Revenues 10,929 12,022 Business 58 Growth Rate 10% 10% Driver 59 Cast of Revenues 7,333 Accounting 60 Gross Profits Business 61 Gross Margin OX Driver 62 Operating Expenses (Opex 1500 1700 Business 63 OpEx Percent of Revenues 0% Driver 64 ERIT Accounting 65 Net Interest Income (Expense) 65 NA 66 Interest Rate 5%. 5%. 596 Driver 67 Pretax income Accounting 68 Tawas Business 69 Tax Rate 0% Driver 70 Net Income 71 72 Balance Sheet 73 Cash 1,292 Accounting 74 Accounts Receivable 1,500 1,600 75 Days of Sales Outstanding (050) 76 PPRE 15,092 Accounting 77 Accounts Payable 1,000 1,200 Business 78 Days of Payables Outstanding (DPO) Driver 79 Equity 12,500 80 81 Hints for Working on the Cash Flow Statement 82 Cash Flow Statements always aggregate (sum up) all the inflows and Outflows of Cash Flow during a period. 83 Inflows of Cash are positive numbers and Outflows of Cash are negative numbers on the Cash Flow Statement. 84 To help you, we show the Outflows in italics. 85 You should remember that increases in Assets, actually decrease Cash so you are subtracting an increase 86 In contrast, increases in Liabilities, Debt and Equity increase Cash sa you are adding an increase 87 Capital Expenditures CapEx) are investments of Cash and an Outflow of Cash on the Cash Flow Statement. 88 As an investment, Capex isn't less than zero, but it is shown as a negative number because it is an Outflow. 89 Dividends are an Outflow of Cash and also shown as a negative number, but Dividends are never less than zero 90 91 Cash Flow Statement 92 Net Income Accounting 93 Depreciation 1,509 Accounting 94 - Increase in Accounts Receivable 95 Increase in Accounts Payable Accounting 96 Capital Expenditures (Captx 1800) (2.000) (2.000) Accounting 97 Dividends Accounting 98 Payout Ratio Business 99 - Increase (Decrease) in Cash 709 Accounting 100 Cash is previous year Cash plus Increase (Decrease in Cash Accounts Receivable is calculated as Revenues multiplied by Days of Sales Outstanding (DSO) / 365 Days of Sales Outstanding 1050) is calolated as Accounts Receivable / Revenues 365 PP&E in a year is calculated as PP&E in the previous year plus CapEx in the current year minus Depreciation in the orrent year Accounts Payable is calculated as Cost of Revenues multiplied by Days of Payables Outstanding (DPO)/355 Days of Payables Outstanding (DPO) is calculated as Accounts Payable / Cast of Revenues 365 Equity in a year is cala.lated as Equity in the previous year plus Net Income minus Dividends ALERT: Because the value of the Dividends are shown as a negative on the Cash Flow Statement the value should be added to subtract Dividends The company uses 10-year straight line depreciation (10% of PP&E in the previous year) Minus the increase in Accounts Receivable the Accounts Receivable in the current year minus that in the previous year Increase in Accounts Payable (the Accounts Payable in the current year minus that in the previous year) Dividends is the negative of the Net Income multiplied by Payout Ratio 101 Nates 20208 10,929 12,022 Business Revenues is driven by the growth rate Gross Profits is calculated as Revenues multiplied by Gross Margin ul. OoFx is calculated as Revenues multiplied by Opex Percent Revenues EBIT is cakulated as Gross Profits minus Operating Expenses (Opex! Interest Income is cakulated as Interest Rate multiplied by Cash (as there is no Debt) Pretax income is calculated as EBIT plus Net Interest Income Expenses Takes is calculated as Pretax Profits multiplied by Tax Rate 55 2018 2019 2020 Relationship 56 Income Statement 57 Revenues 5B Growth Rate 10% 10% Driver 59 Cost of Revenues 5,557 7,333 Accounting 60 Gross Profits Business 61 Gross Margin OX Driver 62 Operating Expenses (Opex! 1500 1700 Business 63 OpEx Percent of Revenues OX Driver 64 EBIT Accounting 65 Net interest Income (Expense) 65 55 NA 66 interest Rate 5% 5% 5% Driver 67 Pretax income Accountine 68 Taxes Business 69 Tax Rate 0% Driver 70 Net Income 71 72 Balance Sheet 73 Cash 1,292 Accounting 74 Accounts Receivable 1,500 1,600 75 Days of Sales Outstanding (DSO) 76 PPBE 15,092 Accounting 77 Accounts Payable 1,000 1,200 Business 78 Days of Payables Outstanding (DPO) Driver 79 Equity 12,500 80 81 Hints for Working on the Cash Flow Statement 82 Cash Flow Statements always aggregate (sum up) all the inflows and Outflows of Cash Flow during a period. 83 Inflaws of Cash are positive numbers and Outflows of Cash are negative numbers on the Cash Flow Statement 84 To help you, we show the Outflows in Italks. 85 You should remember that increases in Assets, actually decrease Cash so you are subtracting an increase 86 In contrast, increases in Liabilities, Debt and Equity increase Cash so you are adding an increase 87 Capital Expenditures (CapEx) are investments of Cash and an Outflow of Cash on the Cash Flow Statement 88 As an investment, CapEx isn't less than zero, but it is shown as a negative number because it is an Outflow. 89 Dividends are an Outflow of Cash and also shown as a negative number, but Dividends are never less than zero 90 91 Cash Flow Statement 92 Net Income Accounting 93 Depreciation 1,509 Accounting 94 - Increase in Accounts Receivable 95 + Increase in Accounts Payable Accounting 96 Capital Expenditures (Capex) (800) () (1,000) ( (1,000) Accounting 97 Diwdends Accounting 98 Payout Ratio Business 99 = Increase Decrease) in Cash 709 Accounting 100 Cash is previous year Cash plus Increase Decrease) in Cash Accounts Receivable is calculated as Revenues multiplied by Days of Sales Outstanding (DSO)/365 Days of Sales Outstanding (DSO) is calculated as Accounts Receivable/ Revenues 365 PP&E in a year is calculated as PP&E in the previous year plus CapEx in the current year minus Depreciation in the current year Accounts Payable is calculated as Cost of Revenues multiplied by Days of Payables Outstanding (DPO)/365 Days of Payables Outstanding (DPO) is calculated as Accounts Payable/Cost of Revenues 365 Equity in a year is calculated as Equity in the previous year plus Net Income minus Dividends ALERT: Because the value of the Dividends are shown as a negative on the Cash Flow Statement the value should be added to subtract Dividends The company uses 10-year straight line depreciation (10% of PP&E in the previous year! Minus the increase in Accounts Receivable (the Accounts Receivable in the current year minus that in the previous year) Increase in Accounts Payable (the Accounts Payable in the current year minus that in the previous year! Dividends is the negative of the Net Income multiplied by Payout Ratio Screenshot Notes Revenues is driven by the growth rate 6.557 Gross Profits is calculated as Revenues multiplied by Gross Margin OpEx is calculated as Revenues multiplied by OpEx Percent Revenues EBIT is calculated as Gross Profits minus Operating Expenses (Opex Interest Income is calculated as Interest Rate multiplied by Cash (as there is no Debt) Pretax income is calculated as EBIT plus Net Interest Income (Expenses) Taxes is calculated as Pretax Profits multiplied by Tax Rate 53 Errors in the model will turn red. The exercise is designed such that an error early in the assignment will not adversely impact later grading 54 55 2018 2019 2020E Relationship 56 Income Statement 57 Revenues 10,929 12,022 Business 58 Growth Rate 10% 10% Driver 59 Cast of Revenues 7,333 Accounting 60 Gross Profits Business 61 Gross Margin OX Driver 62 Operating Expenses (Opex 1500 1700 Business 63 OpEx Percent of Revenues 0% Driver 64 ERIT Accounting 65 Net Interest Income (Expense) 65 NA 66 Interest Rate 5%. 5%. 596 Driver 67 Pretax income Accounting 68 Tawas Business 69 Tax Rate 0% Driver 70 Net Income 71 72 Balance Sheet 73 Cash 1,292 Accounting 74 Accounts Receivable 1,500 1,600 75 Days of Sales Outstanding (050) 76 PPRE 15,092 Accounting 77 Accounts Payable 1,000 1,200 Business 78 Days of Payables Outstanding (DPO) Driver 79 Equity 12,500 80 81 Hints for Working on the Cash Flow Statement 82 Cash Flow Statements always aggregate (sum up) all the inflows and Outflows of Cash Flow during a period. 83 Inflows of Cash are positive numbers and Outflows of Cash are negative numbers on the Cash Flow Statement. 84 To help you, we show the Outflows in italics. 85 You should remember that increases in Assets, actually decrease Cash so you are subtracting an increase 86 In contrast, increases in Liabilities, Debt and Equity increase Cash sa you are adding an increase 87 Capital Expenditures CapEx) are investments of Cash and an Outflow of Cash on the Cash Flow Statement. 88 As an investment, Capex isn't less than zero, but it is shown as a negative number because it is an Outflow. 89 Dividends are an Outflow of Cash and also shown as a negative number, but Dividends are never less than zero 90 91 Cash Flow Statement 92 Net Income Accounting 93 Depreciation 1,509 Accounting 94 - Increase in Accounts Receivable 95 Increase in Accounts Payable Accounting 96 Capital Expenditures (Captx 1800) (2.000) (2.000) Accounting 97 Dividends Accounting 98 Payout Ratio Business 99 - Increase (Decrease) in Cash 709 Accounting 100 Cash is previous year Cash plus Increase (Decrease in Cash Accounts Receivable is calculated as Revenues multiplied by Days of Sales Outstanding (DSO) / 365 Days of Sales Outstanding 1050) is calolated as Accounts Receivable / Revenues 365 PP&E in a year is calculated as PP&E in the previous year plus CapEx in the current year minus Depreciation in the orrent year Accounts Payable is calculated as Cost of Revenues multiplied by Days of Payables Outstanding (DPO)/355 Days of Payables Outstanding (DPO) is calculated as Accounts Payable / Cast of Revenues 365 Equity in a year is cala.lated as Equity in the previous year plus Net Income minus Dividends ALERT: Because the value of the Dividends are shown as a negative on the Cash Flow Statement the value should be added to subtract Dividends The company uses 10-year straight line depreciation (10% of PP&E in the previous year) Minus the increase in Accounts Receivable the Accounts Receivable in the current year minus that in the previous year Increase in Accounts Payable (the Accounts Payable in the current year minus that in the previous year) Dividends is the negative of the Net Income multiplied by Payout Ratio 101