2014 2015

Sales $380,000 $470,000

Cost of goods sold $200,000 $250,000
Cash $30,000 $40,000
Selling and Administrative expenses $38,000 $50,000
Depreciation $55,000 $63,000
Accounts payable $20,000 $34,000
Interest expense $12,000 $14,000
Net fixed assets $240,000 $280,000
Accounts receivable $20,000 $26,000
Notes payable $23,000 $26,000
Inventory $38,000 $52,000
New Equity $0 $36,000
Long-term debt $123,000 $140,000

Ysom Inc.
Income Statement 2014 2015
Sales $380,000 $470,000
Cost of goods sold $200,000 $250,000
Selling and Administrative expenses $38,000 $50,000
Depreciation $55,000 $63,000
Earnings before interest and taxes $87,000 $107,000
Interest paid $12,000 $14,000
Taxable income $75,000 $93,000
Taxes (40%) $30,000 $37,200
Net income $45,000 $55,800
Dividends (40%) $18,000 $22,320
Addition to retained earnings $27,000 $33,480

Ysom Inc.
Balance Sheets 2014 2015
Cash $30,000 $40,000
Accounts receivable $20,000 $26,000
Inventory $38,000 $52,000
Current assets $88,000 $118,000
Net fixed assets $240,000 $280,000

Total assets $328,000 $398,000

Ysom Inc.
Operating Cash Flow 2014 2015
Earnings before interest and taxes $87,000 $107,000
+ Deprecition $55,000 $63,000
- Taxes $30,000 $37,200
Operating cash flow $112,000 $132,800

Ysom Inc.
Net Capital Spending 2015
Increase in net fixed assets $40,000
+Depreciation $63,000
Net capital spending $103,000

Ysom Inc.
Change in NWC 2015
Ending NWC $58,000
- Beginning NWC $45,000
Change in NWC $13,000

Ysom Inc.
Cash Flow from Assets 2015
Operating cash flow $132,800
- Net capital spending $103,000
- Change in NWC $13,000
Cash Flow from Assets $16,800

Ysom Inc.
Cash Flow to Creditors 2015
Interest paid $14,000
- Net new borrowing $17,000
Cash flow to creditors -$3,000

Ysom Inc.
Cash Flow to Stockholders 2015
Dividends paid $22,320
- Net new equity raised $36,000
Cash flow to stockholders -$13,680

FV of new equity at 50% return in 2020 $273,375

Value of Ysom in 2020
VC's ownership
New shares to the VC

Price per share VC to pay

Pre-money valuation of the firm 
Post-money valuation of the firm 
Professor Shin’s carried interest

FV of the first round investment at 50% return

Value of Ysom in 2020
The first round VC's ownership

FV of the second round investment of

$50,000 at 30% return for 3 years
Value of Ysom in 2020
The second round VC's ownership

The first round VC's retention ratio

The first round VC's current percent ownership

New shares to the first round VC

Price per share the first round VC to pay
Shares outstanding before round 2
New shares to the second round VC
Shares outstanding after round 2
Price per share the second round VC to pay

Terminal share price

IRR for the second round VC

IRR for the first round VC
 2014 2015
Notes payable $23,000 $26,000
Accounts payable $20,000 $34,000

Current liabilities $43,000 $60,000

Long-term debt $123,000 $140,000
Equity $162,000 $198,000
Total liabilities and shareholder's equity $328,000 $398,000