Sensitivity: Confidential

Name SUM

Question 1

Write your answer for Part A here.

Write your answer for Part B here.

Write your answer for Part C here.

Cash Position: The cash balance at the end of the year has been in negative balance,
which indicates the company has less sufficient cash balance for its operational activity.

Free cash flow is negative because the investment was increased.

Funding of investment: The company should use the available reserve and surplus for
investment instead of increase debt by borrowing cash.

Question 2

Write your answer for Part A here. Paste the excel sheet containing your calculations
here.

Write your answer for Part B here. Paste the excel sheet containing your calculations
here.

(in $ thousand, some numbers are rounded)

 Sensitivity: Confidential

  2002 2003 2004 2005 2006E

Operating Working Capital 4540 4227 5123 6917 8894
Sales 24652 26797 29289 35088 42597
           
Operating Working Capital Ratio 18 % 16 % 17 % 20 % 21 %

Operating Working capital ratio = Operating Working Capital/Sales

Write your answer for Part C here. Paste the excel sheet containing your calculations

Days Inventory Outstanding (DIO) = Inventory / Cost of goods sold per day*days in a
year

(in $ thousand, some numbers are rounded)

  2002 2003 2004 2005 2006E
Accounts Receivable 3485 4405 6821 10286 14471
Sales 24652 26797 29289 35088 42597
days in a year 360 360 360 360 360
DSO 51 59 84 106 122

Days Sales Outstanding (DSO=) = Accounts receivables / Sales revenue per day*days in
a year

Days Payables Outstanding (DPO) = Accounts payables / Cost of goods sold per
day*days in a year

Write your answer for Part D here.

The long credit facility given by Ceres to their dealers has strained the working capital
which will have negative impact on the cash position of the company. The accounts
receivables will increase in 2006 E when the Days Sales Outstanding increases to 122.3
days. This increase is a cash flow that allows a higher working capital need.
 Sensitivity: Confidential

Question 3

Write your answer for Part A here. Also, paste the economical balance sheet prepared by

Capital employed= fixed assets (PP & E, Other Assets and Land) + OWC

Capital invested = shareholders equity + net debt-cash

Question 4

Paste the excel sheet containing the final answers for Part A here.
 Sensitivity: Confidential

Variable margin = (Sales revenue - cost of goods sold) / Sale

 
(in $ thousand, some numbers are rounded)
  2002 2003 2004 2005 2006E
EBIT 1641 2338 2408 2836 3018
Sales 24652 26797 29289 35088 42597
Operating
8.7% 8.2% 8.08%
Margin 6.7%% 7.09%

Operating Margin = EBIT / Sales

(in $ thousand, some numbers are rounded)

  2002 2003 2004 2005 2006E
Net Income 1 191 1 293 1 279 1 488 1 534
Total Equity 5 024 6 091 7 146 8 336 9 563
Return on Equity 24 % 21 % 18 % 18 % 16 %

Return on Equity = Net Profit/Owners’ Equity

(in $ thousand, some numbers are rounded)

  2002 2003 2004 2005 2006E
Earnings after taxes 1641 2338 2408 2836 3018
before interest
Average Capital 8282 9387 11682 14166 16751
Employed
ROACE 19,81 % 25 % 21 % 20 % 18 %
 Sensitivity: Confidential

Return on Average Capital Employed (ROACE) = EBIT/Average Capital Employed

Write your answer for Part B here.

Write your answer for Part C here.

And this is due to decline in asset turnover which shows ineffective in using of assets to
increase sales, as a consequence higher capital needed.

Question 5

Write your answer for Part A here.