Project 2 cs235

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Purdue University *

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23500

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Accounting

Date

Apr 3, 2024

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pdf

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6

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Report
11/4/2023 TO: Capacity Holdings FROM: Kaden Gorak, Yilin Sun, Keegan Rhoad, Jay Kurup This report below was created by Kaden,Yilin, Keegan, and Jay in an effort to aid Capacity Holdings and its upper management to make better business decisions to improve their company. The purpose of this report is to find what size loan Capacity Holdings will need. 2022 P&L Report
The table provided displays the profit/loss data report for the year 2022. According to the Q1-Q3 report of 2023 below, Capacity Holdings has achieved a higher net income than the previous year. A notable observation from this report is that the Phoenix, AZ location contributed an average amount of revenue compared to other locations but incurred the highest wage and salaries expense. We recommend that the company contemplate cost-cutting measures to limit labor expenses at this particular location.
2023 Q1, Q2, & Q3 P&L Report The table above shows the profit/loss data from Q1, Q2, and Q3. The main thing we can see here is Capacity Holdings made a positive net income. Although you guys had successful quarters, we have a suggestion to improve profits. When looking at the bigger cities, (ex. San Antonio, Dallas, Portland, Houston, and Hartford) they had bigger profits than the other cities. They should put most of their focus on these cities because they are generating a big portion of the net income.
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Total Amount of Loan Necessary for Acquisition Here are some of the base calculations to determine the constraints of the scenario. We clearly established a $1.1 Bn Negotiated price, and then determined what the potential outlook on our cash reserves could be after 2023 Q4. If our clients who used credit on our purchases complete their payments, we could be looking at a big increase in cash reserves from our accounts receivable account. We outlined the likely cash expenditure in the best case, worst case, and most likely events above. We used ScenarioManager to determine the minimum loan amount based on the potential cash reserves left at the end of FY2023. In the best case, the minimum
required loan amount would be significantly lower, resulting in a smaller overall interest expense. Bank choice and Amortization Table (only for two years) - Loan Amortization Table for Sachs By Goldman - Loan Amortization table for Chasing The Morgan -Loan Amortization table for Haris & BMO
The loan Amortization tables shown above are monthly payments for two years in order to pay off the loans for the PP&E amount on the balance sheet. We believe this report can help you guys take another big step in the right direction. Thank you for allowing us to continue to work with you guys. Let us know if you have any questions or concerns! Sincerely, Kaden, Yilin, Keegan, Jay
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