Tire City Inc Case

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Tire City Case
1993 1994 1995 Notes-96 Multipli er 1996 Notes-97 Multipli er 1997

INCOME STATEMENT
Net Sales Cost of Sales Gross Profit 16230 9430 6800 20355 11898 8457 staff projected 20% 23505 incr 58.1% 93, 58.5% 94, 13612 57.9% 95 9893 maintain same relationship to sales; 32% 93, 31.2% 94, 7471 31.8% 95 but "no depreciation on new expansion in 96 and expense on other assets should 213 remain the same % of S/T (Maturities of L/T) & L/T debt; 10.5% 93, 10.6% 94, 10.4% 94 95 2115 Rate (% of pre-tax income): 41% 93, 48.5% 94, 43.7% 95 925 (Avergage = 44.4%) 1190 1.2 0.58 28206 16359 11847 1.2 0.58 33847 19631 14216

SG& A Exp

5195

6352

0.32

9026

0.32

10831

Depreciation Exp

160

180

5% depr. Of the warehouse total cost 213 (120K)

120

333

Net Interest Expense Pre-Tax Income

119 1326

106 1819

0.105

66 2542

0.105

53 2999

Income Taxes Net Income

546 780

882 937

0.444

1129 1413

0.444

1332 1668

Dividends

155

200

dividend payout policy to remain unchanged (19.9% 93, 20% 94, 20.2% 95) as % of net 240 income

0.2

283

0.2

334

BALANCE SHEET
ASSETS Cash 508 609 706 3% of sales "maintain directrelationship to sales"; 15.7% 93, 3652 15.2% 94, 15.5% 95 0.03 846 3% of sales 0.03 1015

Accounts Receivable

2545

3095

0.155

4372 should rise to same proportion of inventory to sales as 1995, which was 1625 9.32% (2190/23505) 6843

0.155

5246

Inventories Total Current Assets

1630 4683

1838 5542

temporary decrease in 2190 inventory 6548

0.0932

3155 9416

Gross Plant & Equipment

3232

3795

Accumulated Depreciation

1335

1515

$2M (of $2.4M) expansion - no other 4163 capital expenditures 41% 93, 40% 94, 41.5% 95, but "no depreciation on new expansion in 96 and expense on other assets should remain 1728 the same

2000

$400K (of $2.4 M) 6163 expansion

400

6563

=1728 + 213

5% depr. Of the warehouse total cost 1941 (120K)+ 213

=1941+ 333

2274

Net Plant & Equipment Total Assets

1897 6580

2280 7822

2435 8983

4222 11065

4289 13705

LIABILITIES
Using the established line of credit, that had not yet been used, 0 this as of '95, 7 years remain of annual installments to 125 MidBank for '91 loan A/P in relationship to sales: 6.4% in 93, 6.5% in 94, 6.1% in 95 (Avg 1440 6.33%) 0.0633 Accr Exp as % sales (7.06% in 93, 7.04% in 1653 94, 7.03% in 95) 0.0704 3218 Using the established line of credit, that had 398 not yet been used

Additional New Funding

0

0

1075

Current Maturities L/T Debt

125

125

125

125

Accounts Payable

1042

1325

1785

0.0633

2143

Accrued Expenses Total Current Liabilities

1145 2312

1432 2882

1986 4294

0.0704

2383 5725

L/T Debt

1000

875

1st installment of the bank loan is not due until 1yr after the completion which is 1998 (do not include =(750125) 750 the $2M)

625

L/T Debt 96 - 125

500

Common Stock Retained Earnings Total Sharholders Equity Total Liabilities

1135 2133 3268 6580

1135 2930 4065 7822

asume will remain the same, since took loan for new cap 1135 expenditures Net Income minus 3880 dividends = 5015 8983

1135 1131 Net Income 5011 Divendends= 6146 11065 1334

1135 6345 7480 13705

FORGOT TO ADD NEW DEBT INTEREST EXPENSE LINE TO INCOME STATEMENT - should add new line item "New Debt Expense" at 10% which is what I paid on the other loans

USE SOLVER TO BALANCE - see prof excel

could use turnover average ratio A/R to Avg Sales - look at Prof excel for example inventory as % of sales is not usually the case; should typicall use inventory turnover ratio (inv/COGS)

FORGOT TO ADD NEW DEBT INTEREST EXPENSE LINE TO INCOME STATEMENT

Also need to add a new maturities lone for the loan balance that we expect to pay in 98 A/P as % of sales is not usually the case it should be related to inventory purchases; should typicall use...
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