Mini Case 435
A. 2002 BALANCESHEET(MILLIONSOFDOLLARS)
Percent Percent
of Sales of Sales
Cash and securities $ 20 1% Accounts payable and
Accounts receivable 240 12% accruals $ 100 5%
Inventories 240 12% Notes payable 100
Total current assets $ 500 Total current liabilities $ 200
Net fixed assets 500 25% Long-term debt 100
Total assets $1,000 Common stock 500
Retained earnings 200
Total liabilities and equity $1,000
B. 2002 INCOMESTATEMENT(MILLIONSOFDOLLARS)
Percent
of Sales
Sales $2,000.00
Cost of goods sold (COGS) 1,200.00 60%
Sales, general, and administrative costs (SGA) 700.00 35%
Earnings before interest and taxes $ 100.00
Interest 10.00
Earnings before taxes $ 90.00
Taxes (40%) 36.00
Net income $ 54.00
Dividends (40%) 21.60
Addition to retained earnings $ 32.40
C. KEYRATIOS
NWC Industry
Profit margin 2.70 4.00
Return on equity 7.71 15.60
Days sales outstanding (365 days) 43.80 days 32.00 days
Inventory turnover 8.33 11.00
Fixed assets turnover 4.00 5.00
Debt/assets 30.00% 36.00%
Times interest earned 10 9.40
Current ratio 2.50 3.00
Return on invested capital (NOPAT/ Operating capital) 6.67% 14.00%
Sue Wilson ,the new financial manager of Northwest Chemicals (NWC) ,an Oregon pro-
ducer of specialized chemicals for use in fruit orchards ,must prepare a financial forecast for
- NWC’s 2002 sales were $2 billion ,and the marketing department is forecasting a 25
percent increase for 2003. Sue thinks the company was operating at full capacity in 2002 ,but
she is not sure about this. The 2002 financial statements ,plus some other data ,are shown
below.
432 Financial Planning and Forecasting Financial Statements
