Use the following financial statements for questions 2, 3 and 4 Carillon Project 2003 BALANCE SHEET Assets Cash Accounts Receivable Inventory Total Current Assets 2004 2005 20.000 30.000 40.000 60.000 70.000 90.000 130 000 180.000 Net Fixed Assets 530.000 710,000 Total Assets 660.000 990.000 2003 Liabilities and Equity Accounts Payable Notes Payable Accruals Total Current Liabilities Long-term Debt Total Liabilities 2004 2005 80,000 60.000 20.000 50.000 30.000 60.000 130.000 170,000 170 000 170 000 300 000 340.000 Common Stock Retained Earnings Total Equity 260,000 450.000 100 000 100.000 100.000 360.000 550.000 Total Liabilities and Equity 560.000 990.000 INCOME STATEMENT 2003 Sales less: Cost of Sales less: General selling and administrative expenses EBITDA less: Depreciation EBIT less: Interest EBT less Taxes 40% Net Income 2004 2005 350.000 450.000 -140.000 -135.000 35.000 45.000 175.000 270,000 95.000-170.000 80.000 100.000 20.000 30.000 60,000 70.000 -24.000 -28.000 36,000 42.000 2. Complete the Statement of Cash Flows for 2005 for the Carillon Project. 3. Calculate the following ratios for the Carillon Project a. Inventory turnover based on sales for 2005 Answer b. Debt ratio for 2004 Answer Fixed Assets Turnover for 2005 Answer d. Basic Earning Power for 2004 4. Again for the Carillon Project, if the company wants a Times Interest Earned Ratio in 2005 of exactly 4 it could either (a) change its level of Debt thereby altering Interest; (b) change its Cost of Goods Sold altering its EBIT; or (c) change its level of Sales also altering its EBIT. .) By how much would it have to change its debt to achieve a TIE of 4 assuming that Notes Payable and Long-term debt are the only interest bearing instruments? Answer b) By how much would sales have to change to achieve a TIE of 4 assuming that Cost of Goods Sold and General, Selling and Administrative Expenses change proportionally? Use the following financial statements for questions 2, 3 and 4 Carillon Project 2003 BALANCE SHEET Assets Cash Accounts Receivable Inventory Total Current Assets 2004 2005 20.000 30.000 40.000 60.000 70.000 90.000 130 000 180.000 Net Fixed Assets 530.000 710,000 Total Assets 660.000 990.000 2003 Liabilities and Equity Accounts Payable Notes Payable Accruals Total Current Liabilities Long-term Debt Total Liabilities 2004 2005 80,000 60.000 20.000 50.000 30.000 60.000 130.000 170,000 170 000 170 000 300 000 340.000 Common Stock Retained Earnings Total Equity 260,000 450.000 100 000 100.000 100.000 360.000 550.000 Total Liabilities and Equity 560.000 990.000 INCOME STATEMENT 2003 Sales less: Cost of Sales less: General selling and administrative expenses EBITDA less: Depreciation EBIT less: Interest EBT less Taxes 40% Net Income 2004 2005 350.000 450.000 -140.000 -135.000 35.000 45.000 175.000 270,000 95.000-170.000 80.000 100.000 20.000 30.000 60,000 70.000 -24.000 -28.000 36,000 42.000 2. Complete the Statement of Cash Flows for 2005 for the Carillon Project. 3. Calculate the following ratios for the Carillon Project a. Inventory turnover based on sales for 2005 Answer b. Debt ratio for 2004 Answer Fixed Assets Turnover for 2005 Answer d. Basic Earning Power for 2004 4. Again for the Carillon Project, if the company wants a Times Interest Earned Ratio in 2005 of exactly 4 it could either (a) change its level of Debt thereby altering Interest; (b) change its Cost of Goods Sold altering its EBIT; or (c) change its level of Sales also altering its EBIT. .) By how much would it have to change its debt to achieve a TIE of 4 assuming that Notes Payable and Long-term debt are the only interest bearing instruments? Answer b) By how much would sales have to change to achieve a TIE of 4 assuming that Cost of Goods Sold and General, Selling and Administrative Expenses change proportionally
