International Finance and Accounting Handbook

APPENDIX A 4 • 15

CACAU DO BRASIL, S.A.

Working Capital and Cash Accumulation

(In Thousands of Brazilian Reals)

Year Year Year Year Year

12345

Accounts Receivables

1. Sales revenue 125,000 133,900 143,431 153,636 164,579


2. Required A/R @ 5% of
   past year’s sales 6,250 6,695 7,172 7,682 8,229


3. Increase over
   prior balance None 445 477 510 547

Inventory

4. Variable costs 80,700 86,829 93,517 100,612 108,331


5. Required inventory
   @ 10% of next year's
   variable costs^1 8,683 9,352 10,061 10,833 11,657


6. Increase over
   prior year's balance 618 669 709 772 824

Cash Balances

7. Net income
   (Exhibit 4A.2,line 17) 5,610 6,656 7,713 8,916 10,116
   ——–– —–—– —–—– —–—– ———


8. Earnings retained
   (25% of net income) 1,403 1,664 1,928 2,229 2,529


9. Plus depreciation +7,500 +7,500 +7,500 +7,500 +7,500


10. Less increase in
    accounts receivable
    (line 3 above) None – 445 – 477 –510 –547


11. Less increase in
    inventory
    (line 6 above) –618 –669 –709 –772 –824
    —–—– —–—– —–—– —–—– ———


12. Addition to
    cash balance
    from operations 8,285 8,050 8,242 8,447 8,658


13. Less repayment of
    debt principal, from
    Note 2, Exhibit 4A.1 – 4,343 – 4,560 – 4,788 –5,028 –5,281
    —–—– —–—– —–—– ——–– ———


14. Net addition to
    cash balance 3,942 3,490 3,454 3,419 3,377

Note 1:Variable costs in the sixth year are calculated as follows:

Sixth year labor (1.05)(2,431) = $2,553
Sixth year local material. (1.02)(216) = 220
Sixth year U.S. material, from Note 1, Exhibit 4A.2 1,249
———
Total unit variable costs $4,022
Times volume (1.03(28,138) × 28,982
———
Total sixth year variable costs $116,566
——––———––—

Exhibit 4A.3. Working Capital and Cash Accumulation.