1. What do you expect the financial position of the business to be in 2020? Extend the financial statements through 2020, assuming Rogers grows revenue by 30%. Please note: to make balance sheet balance, use cash as a plug, i.e., define cash as equal to (current liabilities + net worth) (Accounts Receivables + inventory + other current assets + net fixed assets).

5. Build Nelson Nurseries projected free cash flow statements for 2020 for 2 scenarios below. Please note FCF = (net income + non-cash items +/- changes in working capital capital expenditure)

Scenario 1: use cash as a plug (ignoring Christines operating cash target of 8% of annual revenue.)

Scenario 2: use the assumption of operating cash target of 8% of annual revenue.

Page 3 UVA-F-1944 Exhibit 1 Nelson Nurseries Projected Financial Summary for Nelson Nurseries in thousands of dollars) 2017 2018 2019 2020 788.5 807.6 908.2 1,048.8 402.9 428.8 437.7 503.4 385,6 378.8 470,5 545.4 Profit and Loss Statement Revenue Cost of goods sold Gross profit SG&A expense Depreciation Operating profit Taxes Net profit 301.2 302.0 356,0 404.5 34.2 38.4 36.3 40.9 50.2 38.4 78.2 100.0 17.6 13.1 26.2 39.2 32.6 25.3 52.0 60.8 Balance Sheet Cash 120.1 105.2 66,8 9.4 Accounts receivable 90.6 99.5 119,5 146.4 468.3 507.6 523.4 656.9 Inventory Other current assets 20.9 19.3 22.6 20.9 Current assets 699.9 731.6 732.3 833.6 Net fixed assets 332.1 332.5 384.3 347.9 Total assets 1,032.0 1,064.1 1,116,6 1,181.5 6,0 5.3 4.5 5.0 19.7 22.0 22.1 24.4 Accounts payable Wages payable Other payables Current liabilities 10.2 15.4 16.6 17.9 35.9 42.7 43.2 47.3 Net worth 996.1 1,021.4 1,073.4 1,134.2 22.0 38.8 88.1 4.5 Capital expenditure Purchasest 140.8 145.2 161.2 185.1 Source: All exhibits created by author. Page 4 UVA-F-1944 Exhibit 2 Nelson Nurseries Financial Ratio Analysis of Nelson Nurseries and Benchmarking 2017 2018 2019 2020 Benchmark Revenue growth 2.9% 2.4% 12.5% 15.5% (1.8)% Gross margin (gross profit/ revenue) 48.9% 46.9% 51.8% 52.0% 48.9% Operating margin (operating profit/ revenue) 6.4% 4.8% 8.6% 9.5% 7.6% Net profit margin (net profit / revenue) 4.1% 3.1% 5.7% 5.8% 2.8% Return on assets (net profit / total assets) 3.2% 2.4% 4.7% 5.1% 2.9% Return on capital (net profit/ total capital) 3.3% 2.5% 4.8% 5.4% 4.0% Receivable days (accounts receivable [AR] / revenue X 365) 41.9 45.0 48.0 50.9 21.8 Inventory days (inventory / cost of goods sold (COGSI 365) 424.2 432.1 436.5 476.3 386.3 Payable days (accounts payable [AP] / purchases * 365) 15.6 13.3 10.2 9.9 26.9 Net fixed assets (NFA) turnover (revenue / NFA) 2.4 2.4 2.4 3.0 2.7 Page 3 UVA-F-1944 Exhibit 1 Nelson Nurseries Projected Financial Summary for Nelson Nurseries in thousands of dollars) 2017 2018 2019 2020 788.5 807.6 908.2 1,048.8 402.9 428.8 437.7 503.4 385,6 378.8 470,5 545.4 Profit and Loss Statement Revenue Cost of goods sold Gross profit SG&A expense Depreciation Operating profit Taxes Net profit 301.2 302.0 356,0 404.5 34.2 38.4 36.3 40.9 50.2 38.4 78.2 100.0 17.6 13.1 26.2 39.2 32.6 25.3 52.0 60.8 Balance Sheet Cash 120.1 105.2 66,8 9.4 Accounts receivable 90.6 99.5 119,5 146.4 468.3 507.6 523.4 656.9 Inventory Other current assets 20.9 19.3 22.6 20.9 Current assets 699.9 731.6 732.3 833.6 Net fixed assets 332.1 332.5 384.3 347.9 Total assets 1,032.0 1,064.1 1,116,6 1,181.5 6,0 5.3 4.5 5.0 19.7 22.0 22.1 24.4 Accounts payable Wages payable Other payables Current liabilities 10.2 15.4 16.6 17.9 35.9 42.7 43.2 47.3 Net worth 996.1 1,021.4 1,073.4 1,134.2 22.0 38.8 88.1 4.5 Capital expenditure Purchasest 140.8 145.2 161.2 185.1 Source: All exhibits created by author. Page 4 UVA-F-1944 Exhibit 2 Nelson Nurseries Financial Ratio Analysis of Nelson Nurseries and Benchmarking 2017 2018 2019 2020 Benchmark Revenue growth 2.9% 2.4% 12.5% 15.5% (1.8)% Gross margin (gross profit/ revenue) 48.9% 46.9% 51.8% 52.0% 48.9% Operating margin (operating profit/ revenue) 6.4% 4.8% 8.6% 9.5% 7.6% Net profit margin (net profit / revenue) 4.1% 3.1% 5.7% 5.8% 2.8% Return on assets (net profit / total assets) 3.2% 2.4% 4.7% 5.1% 2.9% Return on capital (net profit/ total capital) 3.3% 2.5% 4.8% 5.4% 4.0% Receivable days (accounts receivable [AR] / revenue X 365) 41.9 45.0 48.0 50.9 21.8 Inventory days (inventory / cost of goods sold (COGSI 365) 424.2 432.1 436.5 476.3 386.3 Payable days (accounts payable [AP] / purchases * 365) 15.6 13.3 10.2 9.9 26.9 Net fixed assets (NFA) turnover (revenue / NFA) 2.4 2.4 2.4 3.0 2.7