Please show calculations. 1) Compute sales growth %, COGS growth % and SGA growt

Question

Please show calculations.

1) Compute sales growth %, COGS growth % and SGA growth % from the three companies below.

2) Prepare three scenarios: best, worse and normal. For example, given that you have three sales growth numbers for each company, use the the lowest as the worse case, highest as the best case, and the average of all three as the normal case. Do the same for COGS growth and SGA growth.

3) Build the pro forma income statement, and balance sheet for next year.
Assume the following:
*Straight-Line depreciation is used
*10% of the earnings are paid as dividend, the rest are retained
*there is no need to buy any new equipment

Use 1-3 to answer:
How much of additional funds are required next year in the form of equity, to support business growth under best, worse and normal scenarios?

Company 1 Income Statement

Company 1 Balance Sheet

Company 2 Income Statement

Company 2 Balance Sheet

Company 3 Income Statement

Company 3 Balance Sheet

Period Ending Total Revenue Cost of Revenue Gross Profit Dec 31, 2014 22,812,000 6,824,000 15,988,000 Dec 31, 2013 22,120,000 6,450,000 15,670,000 Dec 31, 2012 21,386,000 6,137,000 15,249,000 Operating Expenses Research Development Selling General and Administrative Non Recurring Others 7,760,000 225,000 3,371,000 7,690,000 119,000 3,281,000 7,425,000 115,000 3,264,000 Total Operating Expenses Operating Income or Loss 4,632,000 4,580,000 4,445,000 inuin erations Total Other Income/Expenses Net Earnings Before Interest And Taxes Interest Expense Income Before Tax Income Tax Expense Minority Interest Net Income From Continuing Ops 35,000 4,667,000 1,419,000 3,248,000 1,217,000 11,000 4,591,000 1,552,000 3,039,000 1,085,000 497,000 4,942,000 1,606,000 3,336,000 1,177,000 (4,000) 2,155,000 2,031,000 1,954,000 Non-recurring Events Discontinued Operations Extraordinary Items Effect Of Accounting Changes Other Items Net Income Preferred Stock And Other Adjustments Net Income Applicable To Common Shares 2,031,000 1,954,000 2,155,000 2,031,000 1,954,000 2,155,000

Explanation / Answer

1.

Company 1

Sales growth         = (current sales – last year’s sales) / last year’s sales

2013    = (22120000 – 21386000) / 21386000 = 0.034 or 3.4%

2014    = (22812000 – 22120000) / 22120000 = 0.031 or 3.1%

COGS growth       = (current COGS – last year’s COGS) / last year’s COGS

      2013    = (6450000 – 6137000) / 6137000 = 0.051 or 5.1%

      2014    = (6824000 – 6450000) / 6450000 = 0.057 or 5.7%

SGA growth         = (current SGA – last year’s SGA) / last year’s SGA

2013    = (7690000-7425000) / 7425000 = 0.035 or 3.5%

      2014    = (7760000-7690000) / 7690000 = 0.009 or 0.9%

Company 2

Sales growth         = (current sales – last year’s sales) / last year’s sales

2013    = (128752000-127434000) / 127434000 = 0.010 or 1%

2014    = (132447000-128752000) / 128752000 = 0.028 or 2.8%

COGS growth       = (current COGS – last year’s COGS) / last year’s COGS

      2013    = (51464000 – 55228000) / 55228000 = -0.068 or -6.8%

      2014    = (60611000 – 51464000) / 51464000 = 0.177 or 17.7%

SGA growth         = (current SGA – last year’s SGA) / last year’s SGA

2013    = (28414000 – 41066000) / 41066000 = -0.308 or -30.8%

2014    = (41817000 – 28414000) / 28414000 = 0.471 or 47.1%

Company 3

Sales growth         = (current sales – last year’s sales) / last year’s sales

2013    = (13904865 - 13181334) / 13181334 = 0.054 or 5.4%

2014    = (14643387 – 13904865) / 13904865 = 0.053 or 5.3%

COGS growth       = (current COGS – last year’s COGS) / last year’s COGS

      2013    = (10288374 – 9505990) / 9505990 = 0.082 or 8.2%

      2014    = (10925255 – 10288374) / 10288374 = 0.061 or 6.1%

SGA growth         = (current SGA – last year’s SGA) / last year’s SGA

2013    = (776711 – 722045) / 722045 = 0.075 or 7.5%

2014    = (815745 – 776711) / 776711 = 0.050 or 5%

2.

Particulars best                  normal             worse

Sales growth 2013            company 3       company 1       company 2

Sales growth 2014            company 3       company 1       company 2

COGS growth 2013          company 2       company 1       company 3

COGS growth 2014          company 1       company 3       company 2

SGA growth 2013            company 2       company 1       company 3

SGA growth 2014            company 1       company 3       company 2

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