PIPER JEFFREY DEVOLDER Jones Electrical Distribution After several years of rapid growth‚ in the spring of 2007 Jones Electrical Distribution anticipated a further substantial increase in sales. Despite good profits‚ the company had experienced a shortage of cash and had found it necessary to increase its borrowing from Metropolitan Bank—a local onebranch bank—to $250‚000 in 2006. The maximum loan that Metropolitan would make to any one borrower was $250‚000‚ and Jones had been able to stay within
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FINANCIAL STATEMENT OVERVIEW ASSIGNMENT # 3 Members: Zhishuang Liu Siyi Shang Qihui Wu Anqi Li Context 1 Assumptions (1) Interest Income grows at a certain rate every year. (2) There is no issue of new shares (3) There are tendencies of the ratios‚ such as net interest income margin‚ net income margin‚ return on asset‚ return on equity‚ etc.‚ that could be used for forecasting. (4) Simplify the accounts of Balance Sheet‚ Income Statement and Cash Flow Statement
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Jones Electrical Distribution Dr. C. Bulent Aybar Professor of International Finance Context • Jones Electrical Distribution has been expanding rapidly for the past several years. • Increases in working capital requirements have significantly outrun the capacity of the company to generate funds from internal sources. • The company has been forced to forgo taking discounts on accounts payable and to borrow in increasing amounts from its bank to maintain its expansion. • Jones must decide whether
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Current Position Jones Electrical Distribution (hereinafter Jones Electric) is currently facing an issue with cash flows‚ which will ultimately affect the overall profitability and growth potential for the company. The owner‚ Nelson Jones‚ is diligent in paying his suppliers within ten days in order to capitalize on a two percent early pay discount‚ but in doing so‚ has over-extended cash flows. Though the company has been profitable and growing over the past three years‚ its current lender‚ Metropolitan
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Jones Electrical Distribution case Jones Electrical Distribution is a wholesaler of electrical components and devices to general contractors and electricians. Although Jones Electrical Distribution has been profitable in the past few years‚ the company experiences a drain on its cash when it attempts to maintain a rapid growth while taking advantage of trade discounts at the rate of 2%. Problems faced by Jones Electrical Distribution are as follows: Should the company maintain a rapid sales growth
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MBA770 Corporate Finance Case “Jones Electrical Distribution” Description Jones Electrical Distribution (“JED”)‚ which sells electrical components and tools to general contractors and electricians‚ is experiencing rapid growth in a highly-fragmented‚ highly competitive industry and despite profits‚ experiencing a cash shortfall‚ resulting in increased borrowing from Metropolitan Bank (the “Bank”) to $250K‚ the max loan amount the Bank will make to any one client. JED has been able to remain
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Financial Management SBB Fundamentals COURSE GUIDE Leiden University Faculty of Mathematics and Natural Sciences Science Based Business Program March 2011 © 2011 All rights reserved Centre for Business Studies (CBW) Leiden University Except as allowed under Dutch Copyright Law (1912)‚ no part of this material may be reproduced or transmitted in any form‚ by any means‚ electronic or mechanical‚ including photocopying‚ recording‚ or any information storage and retrieval system
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Operating Statement To create the pro forma operating statement we used ratios of COGS/Sales and Operating Expense/Sales for years 2004‚ 2005‚ and 2006. We then took the average of these ratios and multiplied them by sales for 2007 to come up with 2007 COGS and Operating Expenses. To calculate interest expense we included the outstanding loan Jones has with Verden and the new line of credit he would be taking out with Southern Bank and Trust. We calculated Verden’s interest expense by multiplying
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CHAPTER 3 TUTORIAL SOLUTIONS 21. Assuming costs vary with sales and a 20 percent increase in sales‚ the pro forma income statement will look like this: MOOSE TOURS INC. Pro Forma Income Statement Sales $ 1‚114‚800 Costs 867‚600 Other expenses 22‚800 EBIT $ 224‚400 Interest 14‚000 Taxable income $ 210‚400 Taxes(35%) 73‚640 Net income $ 136‚760 The payout ratio is constant‚ so the dividends
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Pro forma statement analysis The outputs from the financial planning model are projected financial statements called pro forma financial statements. In finance and accounting‚ the term pro forma means forecasted or projected (Parrino‚ 2012). These statements are prepared on the basis of the inputs and assumptions that are fed into the financial model. This paper presents an analysis of the pro forma income statement and pro forma balance sheet of a fictitious company called XYZ Company inc. Appendix
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