Case Study: T.

P Jarmon Company Balance Sheet for 12/31/2011 and 12/31/2012

Assets
2011 2012
Cash 15,000 £ 14,000 £
Marketable Securities 6,000 £ 6,200 £
Accounts Receivables 42,000 £ 33,000 £
Inventory 51,000 £ 84,000 £
Prepaid Rent 1,200 £ 1,100 £
Total Current Assets 115,200 £ 138,300 £
Net Plant and Equipment 286,000 £ 270,000 £
Total Assets 401,200 £ 408,300 £

Liabilities and Equity

2011 2012
Accounts Payable 48,000 £ 57,000 £
Accruals 6,000 £ 5,000 £
Notes Payable 15,000 £ 13,000 £
Total Current Assets 69,000 £ 75,000 £
Long-term debt 160,000 £ 150,000 £
Commo Stockholders' Equity 172,200 £ 183,300 £
Total Liabilities 401,200 £ 408,300 £

T.P Jarmon Company Income Statementt for the Year Ended 12/31/2012
Sales 600,000 £
Less COGS - 460,000 £
Gross Profit 140,000 £
Operating and Interest Expenses
General And Administrative -30000
Interest -10000
Depreciation -30000
Total Operation and interest expenses - 70,000 £
Earings before Tax 70,000 £
Tax - 27,100 £
Net Income Available to Common Stockholders 42,900 £
Cash Dividends - 31,800 £
Change in retained Earnings 11,100 £

Statement of Cash Flow

Net Income 42,900 £
Add Depreciation 30,000 £

Operating Cash Flow

 add receivables 9,000 £
less Accruals - 1,000 £
Add Prepaid 100 £
Less Inventory - 33,000 £
Add Payables 9,000 £ - 15,900 £
57,000 £
Investment Cash Flow
add fixed assets - 14,000 £
Marketable securities - 200 £ - 14,200 £

Financial Cash Flow

Notes Payable - 2,000 £
long term debt - 10,000 £
Common stock
Dividends - 31,800 £ - 43,800 £
- 43,800 £
QUESTION A: QUES
Free Cash Flow
Working Capital = Current Assets - Current Liabilities 1) After tax operatin cashflow

Current Assets 138,300 £

Current Liabilities 75,000 £
Working Capital 63,300 £
2) changes in Net working capital
NWC2011
Debt Ratio = Total debt / Total Assets NWC2012
CHANGE
Total debt 163000
Total Assets 408300 3) Capital Expenditure
Debt ratio 39.92% Purchase of p&e

QUESTION B:

Common-sized Income Statement

T.P Jarmon Company Income Statementt for the Year Ended 12/31/2012
Sales 100.00%
Less COGS 76.67%
Gross Profit 23.33%
Operating and Interest Expenses
General And Administrative -5.00%
Interest -0.17%
Depreciation -5.00%
Total Operation and interest expenses -11.67%
Earings before Tax 11.67%
Tax 4.52%
Net Income Available to Common Stockholders 7.15%
Cash Dividends 5.30%
Change in retained Earnings 1.85%

Common-sized Balance Sheet

Case Study: T.P Jarmon Company Balance Sheet for 12/31/2011 and 12/31/2012

Assets
2011 2012
Cash 3.74% 3.43%
Marketable Securities 1.50% 1.52%
Accounts Receivables 10.47% 8.08%
Inventory 12.71% 20.57%
Prepaid Rent 0.30% 0.27%
Total Current Assets 28.71% 33.87%
Net Plant and Equipment 71.29% 66.13%
Total Assets 100.00% 100.00%

Liabilities and Equity

2012
Accounts Payable 11.96% 13.96%
Accruals 1.50% 1.22%
Notes Payable 3.74% 3.18%
Total Current Assets 17.20% 18.37%
Long-term debt 39.88% 36.74%
Commo Stockholders' Equity 42.92% 44.89%
Total Liabilities 100.00% 100.00%
 QUESTION C

er tax operatin cashflow

net income 42900
add depreciation 30000
add interest expenses 10000
82900
nges in Net working capital
46200
63300
-17100

pital Expenditure free cashflow 51800

-14000