Part 2 - The questions are listed on the Part 2 Problem Solving PDF.

You must, however, submit your answers on the Part 2 Problem Solving Excel Answer sheet. Instructions are on the sheet. But, basically, your answers should go in theyellowboxes.It is very strongly suggested that you show your work and use formulas wherever possible. That way,you could possibly receive some partial credit even if the answer is not correct.DO NOT TOUCH the blue boxes - Those are for me.

Financial Statement Analysis MG 770 Final Exam - Winter 2015 Part 2 - Problem Solving - All Answers to be submitted on Excel Answer Sheet (show work or use formulas when appropriate) Use the following information about XYZ Plumbing (FY=12/31), a public company with the most recent closing stock price of $5.00, to answer the following three problems - -----------------------------------------------------------------------------------------------------Income Statement Revenue CGS Gross Profit $ $ 2013 10,000,000 4,000,000 6,000,000 SG&A R&D Deprec & Amort Total Op. Expense $ $ 1,800,000 1,000,000 500,000 3,300,000 Operating Profit $ 2,700,000 Interest cost Interest income 2,000,000 1,000,000 550,000 3,550,000 $ 520,000 90,000 Pre-Tax Tax (35% rate) Net Income $ EPS - Basic 2014 12,000,000 4,800,000 7,200,000 3,650,000 600,000 110,000 $ $ 2,270,000 794,500 1,475,500 $ 3,160,000 1,106,000 2,054,000 $ 0.15 $ 0.21 Average Shares Outstanding 10,000,000 10,000,000 Balance Sheet 2013 2014 ASSETS Cash A/R Inventory Pre-paid expenses Total Current Assets 2,500,000 1,000,000 2,000,000 1,000,000 6,500,000 4,154,000 1,500,000 2,300,000 670,000 8,624,000 15,000,000 5,000,000 20,000,000 15,000,000 7,000,000 22,000,000 Depreciation Net PP&E 500,000 19,500,000 1,050,000 20,950,000 Total Assets 26,000,000 29,574,000 Building and Improvements Equipment Financial Statements - Final Exam 2013 LIABILITIES Accounts Payable Notes Payable Current portion of LTD Accrued Liabilities Total Current Liabilities 2014 500,000 1,500,000 1,000,000 500,000 3,500,000 500,000 1,000,000 1,000,000 520,000 3,020,000 Long-Term Debt 12,000,000 14,000,000 Stockholder's Equity Common Stock at Par Paid in Capital Retained Earnings Total Stockholder's Equity 100,000 9,900,000 500,000 10,500,000 100,000 9,900,000 2,554,000 12,554,000 Total Liabilities + Equity 26,000,000 29,574,000 Spring 2015 -1- 1. (26 Points) Complete the following cash Flow Statement for XYZ Plumbing for 2014 2014 Statement of Cash Flows Net Income Adjustments Depreciation and amortization Cash Provided by Operating Assets and Liabilities Accounts Receivable Inventories Pre-paid expenses Accounts payable Accrued liabilities Net Cash provided (used) by operating activities Cash Provided from Investing Activities Additions to property, plant and equipment Net Cash provided (used) by investing activities Cash Provided from Financing Activities Additions to long term borrowing Addition to short term borrowing Net Cash provided (used) by financing activities Net Cash Flow 2. ( 6 Points) Calculate the following ratios for XYZ Plumbing 2014: 2014 Current Ratio Accounts Receivable turnover Inventory turnover Revenue to Cash Return on Assets Return on Equity Financial Statements - Final Exam Spring 2015 -2- 3. (18 Points, 1 point for each correct box except diluted shares - 6 points) 3.) Fill in the projections for XYZ Plumbing for 2015, based on the following assumptions: 1. 2. 3. 4. 5. 6. 7. 8. 9. Revenue grows by 25% between 2014 and 2015. Gross Margins remain at 2014 levels. SG&A improves by 1% (as a % of revenue) R&D increases by 20%. Depreciation and Amortization costs do not change between 2014 and 2015. Interest costs and expenses are given in the table below. The tax rate remains constant. The Average Shares Outstanding is the same as it was in 2014. Options and Warrants are listed in the following table: Options Officers and Directors Amount 2,000,000 Exercise Price $2.00 Public Warrants Shareholders Amount 4,000,000 Exercise Price $3.00 2015E Revenue CGS Gross Profit SG&A R&D Deprec & Amort Total Op. Expense Operating Profit Interest cost Interest income 600,000 150,000 Pre-Tax Tax (35% rate) Net Income EPS - Basic EPS - Diluted Financial Statements - Final Exam Spring 2015 -3- 770-144 YOUR NAME PROBLEM SOLVING Question 1 Admin 2014 Statement of Cash Flows Admin Key Net Income 2014 Pts 1 Adjustments Depreciation and amortization Cash Provided by Operating Assets and Liabilities Accounts Receivable Inventories Pre-paid expenses Accounts payable Accrued liabilities Net Cash provided (used) by operating activities 1 2 2 2 2 2 2 Cash Provided from Investing Activities Additions to property, plant and equipment Net Cash provided (used) by investing activities 2 2 Cash Provided from Financing Activities Additions to long term borrowing Addition to short term borrowing Net Cash provided (used) by financing activities 2 2 2 Net Cash Flow Key Pts Current Ratio Accounts Receivable turnover Inventory turnover Revenue to Cash Return on Assets Return on Equity 1 1 1 1 1 1 Admin Key 2015E Pts Revenue CGS Gross Profit 1 1 1 SG&A R&D Deprec & Amort Total Op. Expense 1 1 1 1 Operating Profit 1 2 Interest cost Interest income $ $ 600,000 150,000 Pre-Tax Tax (35% rate) Net Income EPS - Basic EPS - Diluted Total Instructions: 1. All answers go in the YELLOW 1 1 1 1 6 26 shaded boxes. Total 18 2. Make sure your name is written in the first YELLOW shaded box in the "2" row GRAND TOTAL 3. Do not resize, reshape or change any of the boxes on this page. 4. Save this file by adding your name to the end i.e., "Final Exam Answer Sheet - Fall 2015- Mintz" 50 Total 6