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EXHIBIT - 1

INCOME STATEMENTS
Net sales
Cost of Goods Sold:
Beginning inventory
Purchases
Total Inventory
Ending inventory
Total Cost of Goods Sold
Gross profit
Operating expenses
Salary Expenses
Earnings before interest and taxes
Interest expense
Net income before income taxes
Provision for income taxes
Net income

1993

1994

1995

$2,921.00

19.0%

$3,477.00

30.0%

$4,519.00

$1,062.00

$432.00
$3,579.00
$4,011.00
$587.00
$3,424.00
$1,095.00
$855.00
$85.00
$155.00
$56.00
$99.00
$22.00
$77.00

$587.00
$819.00
$1,406.00
$607.00
$799.00
$263.00
$221.50
$22.50
$19.00
$13.00
$6.00
$1.00
$5.00

$330.00
$2,209.00
$2,539.00
$337.00
$2,202.00
$719.00
$547.00
$75.00
$97.00
$23.00
$74.00
$14.00
$60.00

75.6%

75.4%
24.6%
18.7%

2.1%

$337.00
$2,729.00
$3,066.00
$432.00
$2,634.00
$843.00
$637.00
$80.00
$126.00
$42.00
$84.00
$16.00
$68.00

78.5%

75.8%
24.2%
18.3%

2.0%

79.2%

75.8%
24.2%
18.9%

1.7%

1996-Q1

77.1%

75.2%
24.8%
20.9%

0.5%

EXHIBIT - 2
BALANCE SHEETS
Cash
Accounts receivable, net
Inventory
Current assets
Property, net
Total Assets
Notes payable, bank
Note payable to Holtz, (C/P)
Notes payable, trade
Accounts payable
Accrued expenses
Term loan, current portion
Current liabilities
Term loan
Note payable, Mr. Holtz
Total Liabilities
Net worth
Total Liabilities + Net Worth
Return on Sales (Profit %)
Return on Assets
Return on Equity
Profit Margin
Asset Turnover
Equity Multiplier

1993

% Sales

$43.00
$306.00
$337.00
$686.00
$233.00
$919.00
$0.00
$0.00
$0.00
$213.00
$42.00
$20.00
$275.00
$140.00
$0.00
$415.00
$504.00
$919.00

1.47%
10.48%
11.54%

%
Assets

1994

% Sales

%
Assets

1995

% Sales

$52.00
$411.00
$432.00
$895.00
7.98%
$262.00
31.46%
$1,157.00
$60.00
$100.00
$0.00
$340.00
1.44%
$45.00
$20.00
29.92% $565.00
$120.00
15.23%
$100.00
$785.00
54.84% $372.00
$1,157.00

1.50%
11.82%
12.42%

$56.00
$606.00
$587.00
$1,249.00
7.54%
$388.00
33.28%
$1,637.00
$390.00
$100.00
$127.00
$376.00
1.29%
$75.00
$20.00
48.83% $1,088.00
$100.00
19.01%
$0.00
$1,188.00
32.15% $449.00
$1,637.00

1.24%
13.41%
12.99%

2.1%
6.5%
11.9%
2.1%
3.2
1.8

2.0%
5.9%
18.3%
2.0%
3.0
3.1

1.7%
4.7%
17.1%
1.7%
2.8
3.6

%
Assets

1996

$53.00
$583.00
$607.00
$1,243.00
8.59%
$384.00
36.22%
$1,627.00
$399.00
$100.00
$123.00
$364.00
1.66%
$67.00
$20.00
66.46% $1,073.00
$100.00
6.11%
$0.00
$1,173.00
27.43% $454.00
$1,627.00

% Sales

%
Assets

4.99%
54.90%
57.16%

36.16%
153.20%

1.48%
65.95%
6.15%
27.90%

0.5%
0.3%
1.1%
0.5%
0.7
3.6

EXHIBIT - 3
CASH FLOW STATEMENTS
1993 *

1994
$68.00

1995
$77.00

1996-Q1
$5.00

Cash Flow in Operating Activities


Change in A/C Receivables
Change in Inventory
Change in Notes Payable, trade
Change in A/C Payables
Change in Accrued Expenses
TOTAL

N.A
N.A
N.A
N.A
N.A
N.A

-$105.00
-$95.00
$0.00
$127.00
$3.00
-$70.00

-$195.00
-$155.00
$127.00
$36.00
$30.00
-$157.00

$23.00
-$20.00
-$4.00
-$12.00
-$8.00
-$21.00

Cash Flow in Investing Activities


Change in PPE
TOTAL

N.A
N.A

-$29.00
-$29.00

-$126.00
-$126.00

$4.00
$4.00

Cash Flow in Financing Activities


Change in Notes Payable Bank
Change in Notes Payable Holtz (Current Portion)
Change in Term Loan (Current Portion)
Change in Long Term Loan
Change in Note Payable, Holtz (Long term)
Equity Buyout
TOTAL

N.A
N.A
N.A
N.A
N.A
N.A
N.A

$60.00
$100.00
$0.00
-$20.00
$100.00
-$200.00
$40.00

$330.00
$0.00
$0.00
-$20.00
-$100.00
$0.00
$210.00

$9.00
$0.00
$0.00
$0.00
$0.00
$0.00
$9.00

Net Cash Flow


Opening Cash Balance
Closing Cash Balance

N.A
N.A
N.A

$9.00
$43.00
$52.00

$4.00
$52.00
$56.00

-$3.00
$56.00
$53.00

-$2.58
$71.58
-$74.16

-$74.16
$16.38
-$90.54

Net Income

DISCOOUNTING AND CASH BALANCES


Opening Cash Balance (from closing of year 9x)
Discounts Available on Purchase @ 2 %
Closing Cash Balance (if discount is availed)

N.A
$44.18
N.A

$52.00
$54.58
-$2.58

(*) 1993 Cash Flow not possible because data not given for 1992

EXHIBIT - 4
COMPARISON WITH INDUSTRIAL AVERAGES
Industrial Preview
Low Profit High Profit

1993

Cost of goods
Operating expense
Cash
Accounts receivable
Inventory
Fixed assets, net
Total Assets

76.90%
22.00%
1.30%
13.70%
12.00%
12.10%
39.10%

75.10%
20.60%
1.10%
12.40%
11.60%
9.20%
34.30%

75.4%
18.7%
1.5%
10.5%
11.5%
8.0%
31.5%

Current liabilities
Long-term liabilities
Equity

52.70%
34.80%
12.50%

29.20%
16.00%
54.80%

29.9%
15.2%
54.8%

1.31
(0.7%)
(1.8%)
(14.3%)

2.52
4.3%
12.2%
22.1%

2.5
2.1%
6.5%
11.9%

Current ratio
Return on sales
Return on assets
Return on equity

Acid Test Ratio


Inventory T/O Days
Days Sales Outstanding
Payable Deferred Period
Cash Conversion Cycle

Other Ratios
1.3
41.5
37.7
34.7
44.5

(*) 1996 Full Year Data not available so it is not added here.

Inventory T/O Days = Inventory*360/COGS


DSO = A/C Rec*360/Sales
Inventory T/O Days = A/C Payable*360/Purchases

1994
1995
Percent of Total Sales
75.8%
75.8%
18.3%
18.9%
1.5%
1.2%
11.8%
13.4%
12.4%
13.0%
7.5%
8.6%
33.3%
36.2%
Percent of Total Assets
48.8%
66.5%
19.0%
6.1%
32.2%
27.4%
Ratios
1.6
1.1
2.0%
1.7%
5.9%
4.7%
18.3%
17.1%

0.8
44.7
42.6
44.9
42.4

0.6
46.8
48.3
37.8
57.2

Clarkson Lumber Co.


Performance Comments (on Current-1995)
1996*
N.A
N.A
N.A
N.A
N.A
N.A
N.A

In between lower and higher profit outlets


Better than high profit outlets
Worse than lower profit outlets
In between lower and higher profit outlets
Worse than lower profit outlets
In between lower and higher profit outlets
In between lower and higher profit outlets

N.A
N.A
N.A

Worse than lower profit outlets


Better than high profit outlets
In between lower and higher profit outlets

N.A
N.A
N.A
N.A

In between lower and higher profit outlets


In between lower and higher profit outlets
In between lower and higher profit outlets
In between lower and higher profit outlets

N.A
N.A
N.A
N.A
N.A

BAR CHARTS FOR EXHIBIT -4

EXHIBIT - 5
PROFORMA INCOME STATEMENT -1996
Net sales
Cost of Goods Sold:
Beginning inventory
Purchases
Total Inventory
Ending inventory
Total Cost of Goods Sold
Disconuts added back @ 2% (3)
Gross profit
Operating expenses
Salary Expenses
Earnings before interest and taxes
Interest expense (Note -1)
Net income before income taxes
Provision for income taxes (Note -2)
Net income

1993

1994

1995

$2,921.00

19.03%

$3,477.00

29.97%

$4,519.00

$330.00
$2,209.00
$2,539.00
$337.00
$2,202.00
$0.00
$719.00
$547.00
$75.00
$97.00
$23.00
$74.00
$14.00
$60.00

75.6%

75.4%
24.6%
18.7%

2.1%

$337.00
$2,729.00
$3,066.00
$432.00
$2,634.00
$0.00
$843.00
$637.00
$80.00
$126.00
$42.00
$84.00
$16.00
$68.00

78.5%

75.8%
24.2%
18.3%

2.0%

$432.00
$3,579.00
$4,011.00
$587.00
$3,424.00
$0.00
$1,095.00
$855.00
$85.00
$155.00
$56.00
$99.00
$22.00
$77.00

Average

21.71%

79.2%

77.8%

75.8%

75.6%

24.2%
18.9%

24.4%
18.7%

1.7%

1.9%

1996

$5,500.00
$587.00
$4,277.37
$4,864.37
$704.37
$4,160.00
$85.55
$1,425.55
$1,026.06
$90.00
$309.49
$110.49
$199.00
$60.86
$138.14

77.8%

75.6%
24.4%
18.7%

2.5%

ASSUMPTIONS FOR INCOME STATEMENTS


1. Many Items like Purchases, Gross Profit and Operating Expenses are varying on a very small scale w.r.t sales therefore the avegare of 3 back
years are taken to minimize these differences. In our studies only last year is taken as a reference but since 3 years data is given, so I made use of
all the data.
2. For the Interest Expenses and Taxes, please see NOTE-1 and Note-2 respectively.
3. Discounts are not subtracted from the purchase directly because the COGS %(average) is getting changed. For simplicity the discount is added
back in the Gross profit instead which will have the similar impact.
4. Discounts are taken only after the 1st quarter of 1996, so a 2% Discount for 1st Qtr is subtracted from the 1996 year (can be seen in the formula
bar as well).
5. Salary Expenses of Mr. Clarkson is a fixed amount therefore seperated from the Variable Operating exp. This step brought the operating %ages
to sales even closer than before.

EXHIBIT - 6
PROFORMA BALANCE SHEET - 1996
Cash
Accounts receivable, net
Inventory
Current assets
Property, net
Total Assets
Notes payable, bank
Note payable to Holtz, current portion
Notes payable, trade
Accounts payable
Accrued expenses
Term loan, current portion
Current liabilities
Term loan
Note payable, Mr. Holtz
Total Liabilities
Net worth
Total Liabilities + Net Worth

1993
$43.00
$306.00
$337.00
$686.00
$233.00
$919.00
$0.00
$0.00
$0.00
$213.00
$42.00
$20.00
$275.00
$140.00
$0.00
$415.00
$504.00
$919.00

% Sales
1.47%
10.48%
11.54%
7.98%
31.46%

1.44%

1994
$52.00
$411.00
$432.00
$895.00
$262.00
$1,157.00
$60.00
$100.00
$0.00
$340.00
$45.00
$20.00
$565.00
$120.00
$100.00
$785.00
$372.00
$1,157.00

% Sales
1.50%
11.82%
12.42%
7.54%
33.28%

1.29%

1995
$56.00
$606.00
$587.00
$1,249.00
$388.00
$1,637.00
$390.00
$100.00
$127.00
$376.00
$75.00
$20.00
$1,088.00
$100.00
$0.00
$1,188.00
$449.00
$1,637.00

% Sales Average
1.4%
1.24%
13.41% 11.9%
12.99%
8.59%
36.22%

8.0%
33.7%

1.66%

1.5%

AFN

1996
$77.13
$654.62
$704.37
$1,436.11
$441.80
$1,850.98
$966.89
$0.00
$0.00
$116.44
$80.52
$20.00
$1,183.84
$80.00
$0.00
$1,263.84
$587.14
$1,850.98
$0.00

% Sales
1.40%
11.90%
12.81%
8.03%
33.65%

1.46%

ASSUMPTIONS FOR BALANCE SHEET


1. Spontaneous Liabilites are increased as a percentage of sales so do the current assets. Here we can see in past three years that their relevant
%ages w.r.t sales are approximately the same. So averaging of all %ages are taken out and it is then multiplied to the forecates $ 5500 sales to get
the forecasted current assets and liabilities.
2. It is assumed that after availing the O/D - Running finance facilities the company will not be left with any notes payable to trade at all.
3. It is also assumed here that expenses do increased as a result of increased sales and thats why the step # 01 calculation is done with it.
4. Since the company is taking all the discounts (2/10 net 30), so at the year end company will only be left with 10 days worth of average payables
which is equal to Purchases* (10/360).

PROFORMA CASH CONVERSION CYCLE -1996


61.0
42.8
10.0
93.8

Inventory Days
DSO
PDP
Cash Conversion Cycle

COMMENTS
The company needs to reduce its inventory days or inventory level.
Better than last year.
10 Days, so taking in all discounts
(1) Major: Inventory Days or Invenotry Level of Stock (2) Improve DSO

NOTE -1 - Interest Expenses


Northrup National Bank (2)
Suburban National Bank (1)
Term Loan (3)
Holtz Equity Payment (4)

NOTE -2 - Tax Expenses


Upto 50
Above 50 and upto 75
Above 75 and upto 100
Above 100 to 339

Period (mon)
9
3
6+6
6+6

AFN
Amt Paid
Interest %
$966.89
$0.00
11%
$0.00
$399.00
11%
$0.00
$10+$10
10%
$0.00
$50+$50
11%
Total Interest Expense for 1996

Tax %
Amount
15%
$50.00
25%
$25.00
34%
$25.00
39%
$99.0
Total Tax Expense for 1996 $199.00

Amount
$79.77
$10.97
$11.50
$8.25
$110.49

Amount
$7.5
$6.3
$8.5
$38.6
$60.86

ASSUMPTIONS FOR NOTE-1


1. Since the Interest Rates for Suburban National Bank are not given so we assumed it to 11%. Moreover there is one more assumption that the
Suburban Bank Runnung Credit is used for 3 months in 1996 (Jan to March).
2. As mentioned in the case for first year i.e 1996 the interest %age ill be 11%. Here we assumed that after 1st quarter the company took the loan
from Northrup National Bank.
3. Term loan: Opening = $120 (for first 6 months) and $110 (for last 6 months). By 31st Dec 1996 the closing will be $100 (with $80 as long term and
$20 as Current portion of long term).
4. Holtz opening balance = $100 (for first 6 months) and $50 (for last six months) and by 31st Dec, 1996 this $50 will be paid to Holtz. The closing
balance will be $0.
5. For simplicity the case of simple/normal interest is used for computing interest percentages.
6. The formula line should be checked for detailed information about calculation.

EXHIBIT - 7
PROFORMA INCOME STATEMENT 1996- QUARTERLY
1996 - 1st Qtr

Particulars
Net sales (1)
Cost of Goods Sold:
Beginning inventory
Purchases
Ending inventory
Total Cost of Goods Sold
Add: Disounts @ 2% of purchases
Gross profit
Operating expenses (5 & Note-3)
Salary Expenses
Earnings before interest and taxes
Interest expense
Net income before income taxes
Provision for income taxes
Net income

1996 - 2nd Qtr

1996 - 3rd Qtr

1996 - 4th Qtr

Amounts

% Sales

Amounts

% Sales

Amounts

% Sales

Amounts

$1,062.00

42.42%

$1,512.50

0.00%

$1,512.50

-6.58%

$1,413.00

$587.00
$819.00
$1,406.00
$607.00
$799.00
$0.00
$263.00
$221.50
$22.50
$19.00
$13.00
$6.00
$1.00
$5.00

77.12%

75.24%

20.86%

$6.00

$607.00
$1,166.42
$1,773.42
$635.48
$1,137.94
$23.33
$397.89
$282.17
$22.50
$93.23
$38.42
$54.80
$9.30
$45.50

77.12%

75.24%

18.66%

$60.80

% Sales

$635.48
$663.97
$1,166.42 77.12% $1,089.69 77.12%
$1,801.90
$1,753.65
$663.97
$690.58
$1,137.94 75.24% $1,063.08 75.24%
$23.33
$21.79
$397.89
$371.72
$282.17 18.66% $263.60 18.66%
$22.50
$22.50
$93.23
$85.61
$36.80
$36.54
$56.43 $117.23 $49.07 $166.30
$18.77
$19.14
$37.66
$29.93

ASSUMPTIONS FOR INCOME STATEMENT - QUARTERLY FORECAST


1. As mentioned in the case that Q2 & Q3 comprises of 50% of the total year sales thats why the sales distribution are made on the following
basis.
Q2 Sales = Q3 Sales = 5,500 * 0.5 / 2 = $ 1512.5
Q4 Sales = 5,500 - Q1 Sales - Q2 Sales - Q3 Sales = $ 1413.0
2. All the items in income statement are carried from the Q1 1996 except the operating expenses.
3. For the Interest Expenses and Taxes, please see NOTE-4 and Note-5 respectively.
4. Salary Expenses of Mr. Clarkson is a fixed amount therefore seperated from the Variable Operating exp. This step will help us compute
the operating cost only on variable expenses. Salary per quarter = 90/4 = $ 22.5.
5. The operating expenses for this organisation is a variable cost (since the salary of Mr. Clarkson is already subtracted) and it is assumed
that it is the function of inventory stock and inventory turnover days. As seen in Note-3 the invenotry days in Q1 is 68 days far more than any
other period before, that is why the operating costs were very high in this quarter. Later in Q2, Q3 & Q4 it has gone back to the regular level
(even lower). For this we used the average operating cost (as %age of sales) to forecast the subsequent quarters.
6. Discounts are taken only after the 1st quarter of 1996, and to make the calculations simple it is added back to COGS when computing the
gross profit. In this way we can make the COGS (%age to sales) easier to compute.

EXHIBIT - 8
PROFORMA BALANCE SHEET 1996- QUARTERLY
Cash
Accounts receivable, net
Inventory
Current assets
Property, net
Total Assets
Notes payable, banks
Note payable to Holtz, current portion
Notes payable, trade
Accounts payable
Accrued expenses
Term loan, current portion
Current liabilities
Term loan
Note payable, Mr. Holtz
Total Liabilities
Net worth
Total Liabilities + OE
AFN

$53.00
142%
$583.00
142%
$607.00
$1,243.00
$384.00
142%
$1,627.00
$399.00
$100.00
$123.00
$364.00
$67.00
142%
$20.00
$1,073.00
$100.00
$0.00
$1,173.00
$454.00
$1,627.00
$0.00

$75.48
100.0%
$830.31
100.0%
$635.48
$1,541.27
$546.89
100.0%
$2,088.17
$1,206.23
$50.00
$0.00
$127.01
$95.42
100.0%
$20.00
$1,498.66
$90.00
$0.00
$1,588.66
$499.50
$2,088.17
$0.00

$75.48
93.4%
$830.31
93.4%
$663.97
$1,569.76
$546.89
93.4%
$2,116.65
$1,197.06
$50.00
$0.00
$127.01
$95.42
93.4%
$20.00
$1,489.49
$90.00
$0.00
$1,579.49
$537.16
$2,116.65
$0.00

$70.52
$775.69
$690.58
$1,536.78
$510.92
$2,047.70
$1,172.80
$0.00
$0.00
$118.65
$89.14
$20.00
$1,400.60
$80.00
$0.00
$1,480.60
$567.10
$2,047.69
$0.00

ASSUMPTIONS FOR BALANCE SHEET - QUARTERLY FORECAST


1. Spontaneous Liabilites are increased as a percentage of sales so do the current assets. Here we have used the amount in the previous
quarter and mulitplied it by the increase in sales (in % age). This step will relate the change in spontaneous liabilities and current assets to
change in sales in quarters.
2. As seen clearly above that the company requires external additional financing far more than $ 400 (from Suburban National Bank), so the
company will pay this off after 1st quarter and will look upto Northrup Bank for this excess financing requirements.
3. It is also assumed here that expenses do increased as a result of increased sales and thats why the step # 01 calculation is done with it.
4. Since the company is taking all the discounts (2/10 net 30), so at the year end company will only be left with 10 days worth of average
payables which is equal to Purchases* (10/360).
5. All the loan payments are made in the quarters required and so as the interest calculated is based on quarters (NOTE - 4).

Inventory Days
DSO
PDP
Cash Conversion Cycle

NOTE -3: Operating Expenses as a function of Inventory Days


68.4
50.3
49.4
49.4
40.0
10.0
77.8
89.7

52.5
49.4
10.0
91.9

58.5
49.4
10.0
97.9

NOTE -4: Interest Expenses


Quarters
Liability
Interest Rates
Opening Balance
Loan Taken
Payments
Closing Balance
Interest Expenses
Liability
Interest Rates
Opening Balance
Loan Taken
Payments
Closing Balance
Interest Expenses
Liability
Interest Rates
Opening Balance
Loan Taken
Payments
Closing Balance
Interest Expenses
Grand Total

Q1 -1996

$0.00
$0.00
$0.00
$0.00

$100.00
$0.00
$0.00
$100.00

$100.00
$0.00
$0.00
$100.00
$0.00
N.A

Q2 -1996
Q3-1996
Q4 -1996
Northrup National Bank
11%
$0.00
$1,206.23 $1,197.06
$1,206.23
-$9.17
-$24.26
$0.00
$0.00
$0.00
$1,206.23 $1,197.06 $1,172.80
$33.17
$33.17
$32.92
Holt'z
11%
$100.00
$50.00
$50.00
$0.00
$0.00
$0.00
$50.00
$0.00
$50.00
$50.00
$50.00
$0.00
$2.75
$1.38
$1.38
Term Loan
10%
$100.00
$90.00
$90.00
$0.00
$0.00
$0.00
$10.00
$0.00
$10.00
$90.00
$90.00
$80.00
$2.50
$2.25
$2.25
$38.42
$36.80
$36.54
ASSUMPTIONS FOR NOTE-4

1. Since the company has to get the AFN from Northrup Bank therefore the loan or AFN is not considered from the Suburban National Bank.
2. Interest expenses for Q1-1996 is not calculated here because it is already given in the case.
3. As mentioned in the case for first year i.e 1996 the interest %age will be 11%. Here we assumed that after 1st quarter the company took
the loan from Northrup National Bank.
4. Term loan: Opening = $120 (for first 6 months) and $110 (for last 6 months). By 31st Dec 1996 the closing will be $100 (with $80 as long
term and $20 as Current portion of long term).
5. Holtz opening balance = $100 (for first 6 months) and $50 (for last six months) and by 31st Dec, 1996 this $50 will be paid to Holtz. The
closing balance will be $0.
6. For simplicity the case of simple/normal interest is used for computing interest percentages.
7. Loans/Running Finance (from bank) are taken on the 1st day of quarter and is repaid on the last day of quarter.
8. The formula line should be checked for detailed information about calculation.

NOTE-5: Tax Expenses


Upto $ 50
Above $ 50 upto $ 75
Above $ 75 upto $ 100
Above $ 100 upto $ 339
Total

Tax %
15%
25%
34%
39%
-

96-Q1
$6.00
$0.00
$0.00
$0.00
$6.00

$0.90
$0.00
$0.00
$0.00
$0.90

96-Q2
$44.00
$6.60
$10.80
$2.70
$0.00
$0.00
$0.00
$0.00
$54.80
$9.30

96-Q3
$0.00
$0.00
$14.20
$3.55
$25.00
$8.50
$17.23
$6.72
$56.43
$18.77

96-Q4
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$49.07 $19.14
$49.07 $19.14

Grand Total (Net Income)

$6.00

$60.80

$117.23

$166.30

EXHIBIT -9
PROFORMA INCOME STATEMENT 1996 Method (a) -Yearly
Method (b) - Qtrly Combined
Particulars
Net sales
Cost of Goods Sold:
Beginning inventory
Purchases
Ending inventory
Total Cost of Goods Sold
Add: Disounts @ 2% of purchases
Gross profit
Operating expenses
Salary
Earnings before interest and taxes
Interest expense
Net income before income taxes
Provision for income taxes
Net income

Amounts
$5,500.00
$587.00
$4,277.37
$4,864.37
$704.37
$4,160.00
$85.55
$1,425.55
$1,026.06
$90.00
$309.49
$110.49
$199.00
$60.86
$138.14

% Sales

Prev Aver 93-95

77.77%

77.8%

75.64%

75.6%

18.66%

18.7%

2.51%

1.9%

Amounts
$5,500.00
$2,493.45
$4,241.53
$6,734.98
$2,597.03
$4,137.95
$68.45
$1,430.50
$1,049.44
$90.00
$291.07
$124.76
$166.30
$48.21
$118.10

% Sales

Prev Aver 93-95

77.12%

77.8%

75.24%

75.6%

19.08%

18.7%

2.15%

1.9%

EXHIBIT - 10
PROFORMA BALANCE SHEET 1996
Method (a) -Yearly
Particulars
Cash
Accounts receivable, net
Inventory
Current assets
Property, net
Total Assets
Notes payable, bank
Note payable to Holtz, current portion
Notes payable, trade
Accounts payable
Accrued expenses
Term loan, current portion
Current liabilities
Term loan
Note payable, Mr. Holtz
Total Liabilities
Net worth
Total Liabilities + Net Worth

Year -1996 (Northrup National Bank)


Q1
Q2
Q3
Q4

Amounts
$77.13
$654.62
$704.37
$1,436.11
$441.80
$1,850.98
$966.89
$0.00
$0.00
$116.44
$80.52
$20.00
$1,183.84
$80.00
$0.00
$1,263.84
$587.14
$1,850.98

% Sales
1.40%
11.90%
12.81%

Prev Aver 93-95


1.40%
11.90%
12.81%

8.03%
33.65%

8.03%
33.65%

1.46%

1.46%

AFN
N.A
$1,206.23
$1,197.06
$1,172.80

Taken
N.A
$1,206.23
$0.00
$0.00

Paid
N.A
$0.00
$9.17
$24.26

Method (b) - Year End


Amounts
$70.52
$775.69
$690.58
$1,536.78
$510.92
$2,047.70
$1,172.80
$0.00
$0.00
$118.65
$89.14
$20.00
$1,400.60
$80.00
$0.00
$1,480.60
$567.10
$2,047.69
Ending Balance
N.A
$1,206.23
$1,197.06
$1,172.80

% Sales
1.3%
14.1%
12.6%

Prev Aver 93-95


1.40%
11.90%
12.81%

9.3%
37.2%

8.03%
33.65%

1.6%

1.46%

EXHIBIT - 11
COMPARISON WITH INDUSTRIAL AVERAGES

Cost of goods
Operating expense
Cash
Accounts receivable
Inventory
Fixed assets, net
Total Assets
Current liabilities
Long-term liabilities
Equity
Current ratio
Return on sales
Return on assets
Return on equity

Industrial Preview
Clarkson Lumber Co.
Low Profit High Profit 1993
1994
1995 1996 (b)
Percent of Total Sales
76.90%
75.10%
75.4% 75.8% 75.8% 75.24%
22.00%
20.60%
18.7% 18.3% 18.9% 19.08%
1.30%
1.10%
1.5%
1.5%
1.2%
1.28%
13.70%
12.40%
10.5% 11.8% 13.4% 14.10%
12.00%
11.60%
11.5% 12.4% 13.0% 12.56%
12.10%
9.20%
8.0%
7.5%
8.6%
9.29%
39.10%
34.30%
31.5% 33.3% 36.2% 37.23%
Percent of Total Assets
52.70%
29.20%
29.9% 48.8% 66.5% 68.40%
34.80%
16.00%
15.2% 19.0% 6.1%
3.91%
12.50%
54.80%
54.8% 32.2% 27.4% 27.69%
Ratios
1.31
2.52
2.5
1.6
1.1
1.10
(0.7%)
4.3%
2.1%
2.0%
1.7%
2.15%
(1.8%)
12.2%
6.5%
5.9%
4.7%
5.77%
(14.3%)
22.1%
11.9% 18.3% 17.1% 20.82%
Other Ratios

Acid Test Ratio


Inventory T/O Days
Days Sales Outstanding
Payable Deferred Period
Cash Conversion Cycle

1.3
41.5
37.7
34.7
44.5

0.8
44.7
42.6
44.9
42.4

0.6
46.8
48.3
37.8
57.2

0.60
58.5
49.4
10.0
97.9