GILBERT LUMBER COMPANY

ASSUMPTION: CASH CONSTANT AND NO INCREASE IN CAPITAL

Sales - growth rate 30.0%

Inflation 0.0%
Interest rate 11.00%
EBIT/Sales 3.8%
Tax rate 16.0%
Receivables / Sales 11.8% 17.8% WCR/SALES
Inventories / Sales 15.5%
Payables / Sales 9.5%
Depreciation / Fixed Assets 5.0%
Dividend: pay-out ratio 0.0%
Fixed assets/ Sales 5.8%
Var Short term Debt/Var Total Debt 100.0% (When I need new debt, it wil come 100% from ST De
Variation Issuance Equity / Variation Total Debt 0.0%
2013 2014 2015 2016
Profit and Loss Account

Sales 2694 3502 4553 5919

EBIT 86 133 173 225
Interests 33 32 48 64
EBT 53 101 125 161
Taxes 9 16 20 26
Net income 44 85 105 136

Cash-Flow Statement
2013 2014 2015 2016 Cumulative
EBIT 133 173 225 531
+Depreciation 8 10 13 31
-Var.WCR 183 187 243 614
-Taxes 16 20 26 62
- Interests 32 48 64 143
=Operating CF -91 -72 -94 -257
-Investments 54 71 92 217
=FCF -145 -143 -187 -474
Dividends 0 0 0 0
Cash-flows -145 -143 -187 -474

Var. Equity 0 0 0 0
Var. LT debt 0 0 0 0
Var. ST debt 145 143 187 474
Var. Cash. 0 0 0 0

Balance Sheet 2013 2014 2015 2016

Fixed Asset 157 203 264 343
Inventories 418 543 706 917
Receivables 317 413 537 698
Cash 41 41 41 41
Total Assets 933 1200 1548 2000

Equity 348 433 538 674

LT debt 50 50 50 50
Payables 295 333 433 562
ST Debt 240 385 527 714
Total Liabilities 933 1200 1548 2000

Summary 2014 2015 2016

Net income 85 105 136
FCF -145 -143 -187
D/TL 36% 37% 38%
ROE 19.6% 19.5% 20.1%
 Summary

200

150
WCR/SALES
100

50

0
2014 2015 2016
w debt, it wil come 100% from ST Debt) -50

-100

-150

-200

-250

What happens if we increase the growth rate?

The more you sell, the higher the profit, but the more cash you lose

Is the loan of 460k enough to cover next 3 years?

No
mary

45%

40%

35% Net income

FCF
30%
D/TL
25% ROE
2016
20%

15%

10%

5%

0%
Cash-Flow Statement
0% 5% 10% 20% 30%
EBIT 259 285 314 377 447
+Depreciation 23 25 26 28 31
-Var.WCR 40 115 198 389 614
-Taxes 27 30 33 40 48
- Interests 89 98 108 128 150
=Operating CF 126 67 1 -152 -333
-Investments 23 49 77 141 217
=FCF 104 18 -76 -293 -550
Dividends 0 0 0 0 0
Cash-flows 104 18 -76 -293 -550
Balance sheets at December 31, 2011-2013, and March 31, 2014
2011 2012 2013 2014 (1st qu.)
Cash 58 48 41 31
Accounts receivable 171 222 317 345
Inventory 239 326 418 556
Current assets 468 596 776 932
Property, net 126 140 157 162
Total assets 594 736 933 1094

Notes payable, bank 0 146 233 247

Notes payable, Stark 105 0 0 0
Notes payable, trade 0 0 0 157
Accounts payable 124 192 256 243
Accrued expenses 24 30 39 36
LT debt, current portion 7 7 7 7
Current liabilities 260 375 535 690
LT debt 64 57 50 47
Total liabilities 324 432 585 737
Net worth 270 304 348 357
Total liabilities & net worth 594 736 933 1094

2011 2012 2013 2014

Net Working Capital 208 221 241 242
Working Capital Req. 262 326 440 622
Net Liquid Balance -54 -105 -199 -380

Gilbert Company: NWC, WCR and NLB

800

600

400

200

0
2011 2012 2013 2014

-200

-400
Net Working Capital Working Capital Req. Net Liquid Balance
-600
Balance sheets at December 31, 2011-2013, and March 31, 2014
2011 2012 2013 2014 (1st qu.)
Cash 58 48 41 31
Accounts receivable 171 222 317 345
Inventory 239 326 418 556
Current assets 468 596 776 932
Property, net 126 140 157 162
Total assets 594 736 933 1094

Notes payable, bank 0 146 233 247

Notes payable, Stark 105 0 0 0
Notes payable, trade 0 0 0 157
Accounts payable 124 192 256 243
Accrued expenses 24 30 39 36
LT debt, current portion 7 7 7 7
Current liabilities 260 375 535 690
LT debt 64 57 50 47
Total liabilities 324 432 585 737
Net worth 270 304 348 357
Total liabilities & net worth 594 736 933 1094

Operating Statements 2001-2004

2011 2012 2013 2014 (1st qu.)
Net sales 1697 2013 2694 718
Cost of goods sold
Beginning inventory 183 239 326 418
Purchases 1278 1524 2042 660
Ending inventory 239 326 418 556
Total cost of goods sold 1222 1437 1950 522
Gross profit 475 576 744 196
Operating expense 425 515 658 175
Interest expense 13 20 33 10
Net income before taxes 37 41 53 11
Provision for income taxes 6 7 9 2
Net income 31 34 44 9

Accounting Ratios

Liquidity
Current Asset/Current Liability 1.80 1.59 1.45 1.35
Acid Test 0.88 0.72 0.67 0.54
NWC/WCR 0.79 0.68 0.55 0.39

Determinant of turnover
Inventories/CGS * 365 71 83 78 97
Receivables/Sales * 365 37 40 43 44
Payables/Purchase * 365 35 46 46 34

Receivables/Sales 10.1% 11.0% 11.8% 12.0%

Inventories/Sales 14.1% 16.2% 15.5% 19.4%
Payables/Sales 7.3% 9.5% 9.5% 8.5%
=WCR/Sales 16.9% 17.7% 17.8% 22.9%
WCR in days 62 65 65 84
 Solvability
Liability/(Liability + Net worth) 54.5% 58.7% 62.7% 67.4%

Profitability: DuPont System of Financial Control

Profit margin (net income/sales) 1.83% 1.69% 1.63% 1.25%

x
Asset turnover (sales/asset) 2.86 2.74 2.89 2.63
x
Financial leverage (asset/equity) 2.20 2.42 2.68 3.06
=
ROE 11.48% 11.18% 12.64% 10.08%

2011 2012 2013

ROE 11.48% 11.18% 12.64% 10.08%

ROIC 9.39% 9.84% 11.19% 2.61%

Interest 7% 10% 11% 3%

D/E 65.2% 69.1% 83.3% 84.3%

Tc 16% 17% 17% 18%
Leverage impact 2.1% 1.3% 1.5% -0.1%

check 11.48% 11.18% 12.64% 2.52%

2011 2012 2013 Q1 2014

Interest 7.4% 9.5% 11.4% 3%
D/E 65.2% 69.1% 83.3% 84.3%
Tc 16% 17% 17% 18%

ROE 11.48% 11.18% 12.64% 10.08%

ROIC 9.39% 9.84% 11.19% 2.61%
Leverage impact 2.1% 1.3% 1.5% -0.1%
 Discount Borrow 100 at
Month Sales
2% a cost of 0,9%
1 100 2 0.9 11.35%
2 100 2 0.9
3 100 2 0.9
4 100 2 0.9
5 100 2 0.9
6 100 2 0.9
7 100 2 0.9
8 100 2 0.9
9 100 2 0.9
10 100 2 0.9
11 100 2 0.9
12 100 2 0.9

Cost (not discounted) 24 10.8