For years ending 12/31

INCOME STATEMENT

Net sales
Cost of sales
Gross profit

1993

GAS expenses

Depreciation
EBIT
Net interest expense
Pre-tax income
Income taxes
Net income
Dividends
Addition to Retained earnings

16230 $
9430
6800
5195

160
1,445

Marginal tax rate

1994

1995

20355 $ 23,505
11898
13,612
8457
9,893
7,471
6352
180
213
1,925
2,209

119.0

106.0

94.0

1,326

1,819

2,115

546

822

925

997
200
797

1,190
240
950

780
155 $
625
41.2%

45.2%

43.7%

BALANCE SHEET
Assets

Cash
Accounts Receivable

Inventories
Total current assets
Accounts payable
Accrued expenses
NOWC

Gross plant & equipment

Accumulated depreciaiton
Net plant & equipment
Total net OC

508 $
609
2,545
3,095

706
3,652

1,630

1,838

2,190

4,683
1,042

5,542
1,325

6,548
1,440

1,145
2,496

1,432
2,785

1,653
3,455

3,232

3,795

4,163

1,335

1,515

1,728

1,897

2,280

2,435

4,393

5,065

5,890

125

125

125

1,000

875

750

1,125
1,135

1,000
1,135

875
1,135

2,133

2,930

3,880

3,268

4,065

5,015

4,393

5,065

5,890

617

391

169

Operating capital

CMLTD
Bank debt
Long term debt
Total debt capital
Common stock
Retained earnings
Total shareholders' equity
Operating capital
difference amount
Net debt

1997

1996F

$ 28,206.0 $
$ 16,415.89 $
$ 11,790.11 $
$ 8,941.30 $
213
$ 2,635.81 $
101.3495
$ 2,534.46 $
$ 1,115.16 $
$ 1,419.30 $
$
283.86 $
$ 1,135.44 $
44.0%

$
$
$
$
$
$

$
$
$
$

846.18
4,371.93
1625
6,843.11
1,776.98
1,985.70
3,080.43
6163
1,941
4,222
7,302.43

125
401.99
625
1151.99
1135
5,015.44
6,150.44
7,302.43
(0.00)
306

33,847.2
19,665.22
14,181.98
10,682.18
333
3,166.84
119.3585
3,047.48
1,340.89
1,706.59
341.32
1,365.27
44.0%

$
$
$
$
$
$

$
$
$
$

1,015.42
5,212.47
3,147.79
9,375.67
2,132.37
2,379.46
4,863.84
6563
2,274
4,289
9,152.88

125
1012.17
500
1637.17
1135
6,380.71
7,515.71
9,152.88
(0.00)
622

Retained Earnings: EBIT Interest Payments Taxes on

Here Tax rate = 44% of PBT
Dividend Payments = 20% of PAT
Interest Payments = Average (Opening LT Debt + Ending
Rate
Here Op LT Debt = 750; Ending LT Debt = 625; Expected
Hence Retained Earnings for the year: [EBIT-0.5(875+7
Payout Ratio]
=[3166.80 0.5(625+750+x)*0.1]*0.56*0.8
=1387.9264 0.0224 x
Total Net Operating Capital on Assets side and Liability s
Total Net Operating Capital on Assets side : Net Op WC +
= 4863.84+4289=
Total Net Op Capital on Liabilities side: LT debt + Curren
+ Common Equity + Retained Earnings
Here LT Debt outstanding at the end of the year = 625
CMLT Debt = 125
Common Equity = 1135
Retained Earnings at the end of the year = Retained Ear
during 1996
= 3880 + 1144.44 -0.0224 x

Solving for x (Exp Bank Loan) => 7302.43 = 625+125+

7302.43 -6909.44 = (1-0.0224) x
x= 392.99 / 0.9776 = 401.99 ; Assuming no fresh
will approach bank for a loan of 402k in 1996.

rnings: EBIT Interest Payments Taxes on EBT Dividend payments

e = 44% of PBT
yments = 20% of PAT
ments = Average (Opening LT Debt + Ending LT Debt + Loan Taken during the year) * Int

Debt = 750; Ending LT Debt = 625; Expected Loan from Bank =x; Int Rate = 10%
ned Earnings for the year: [EBIT-0.5(875+750+x)*0.10]*[1-TaxRate]*[1-Dividend
o]
80 0.5(625+750+x)*0.1]*0.56*0.8
0.0224 x
erating Capital on Assets side and Liability side should match.
erating Capital on Assets side : Net Op WC + Net Plant & Equip
4+4289=
Capital on Liabilities side: LT debt + Current Maturities of LT Debt + Exp Bank Loan (x)
Equity + Retained Earnings
t outstanding at the end of the year = 625
= 125
uity = 1135
rnings at the end of the year = Retained Earnings at the end of 1995 and Additions

144.44 -0.0224 x

x (Exp Bank Loan) => 7302.43 = 625+125+x+1135+3880+1144.44-0.0224x

09.44 = (1-0.0224) x
99 / 0.9776 = 401.99 ; Assuming no fresh issue of equity or long term debt, Mr Martin
h bank for a loan of 402k in 1996.