Balance Sheet Items Cash Accounts Receivable Inventory Gross P&E Net P&E Total Assets Accounts Payable Operating Cash Flow Net Capital Spending Change in Net Working Capital Total Cash Flow from Assets 2,000 0 8,000 32,000 32,000 42,000 0 3,000 2,000 9,000 40,000 32,000 46,000 3,000 4,000 3,000 10,000 48,000 32,000 49,000 4,000 6,000 4,000 12,000 56,000 32,000 54,000 4,000 6,000 0 12,000 64,000 32,000 50,000 0
Balance Sheet Items Cash Accounts Receivable Inventory Gross P&E Net P&E Total Assets Accounts Payable Operating Cash Flow Net Capital Spending Change in Net Working Capital Total Cash Flow from Assets 2,000 0 8,000 32,000 32,000 42,000 0 3,000 2,000 9,000 40,000 32,000 46,000 3,000 4,000 3,000 10,000 48,000 32,000 49,000 4,000 6,000 4,000 12,000 56,000 32,000 54,000 4,000 6,000 0 12,000 64,000 32,000 50,000 0
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Your friend James comes to you with his plan to start an Indiana-based daycare company
Hoosier DaDa inc. He brings you the pro forma financial statements below that reflect his
projections for the company’s first four years in business. Unfortunately, James has never taken a
finance class, so he asks you to complete the following financial analysis.
Transcribed Image Text:This table provides a financial summary across five years, detailing both income statement items and balance sheet items.
**Income Statement Items:**
1. **Revenue:**
- Year 0: 60,000
- Year 1: 110,000
- Year 2: 165,000
- Year 3: 240,000
2. **Cost of Goods Sold (COGS):**
- Year 0: 36,000
- Year 1: 66,000
- Year 2: 99,000
- Year 3: 144,000
3. **Selling, General & Administrative (SG&A) Expenses:**
- Year 0: 12,000
- Year 1: 22,000
- Year 2: 33,000
- Year 3: 48,000
4. **Depreciation:**
- Constant at 8,000 for Years 0 through 3
5. **Earnings Before Interest and Taxes (EBIT):**
- Year 0: 4,000
- Year 1: 14,000
- Year 2: 25,000
- Year 3: 40,000
6. **Taxes:**
- Year 0: 1,400
- Year 1: 4,900
- Year 2: 8,750
- Year 3: 14,000
7. **Net Income:**
- Year 0: 2,600
- Year 1: 9,100
- Year 2: 16,250
- Year 3: 26,000
**Balance Sheet Items:**
1. **Cash:**
- Year 0: 2,000
- Year 1: 3,000
- Year 2: 4,000
- Year 3: 6,000
2. **Accounts Receivable:**
- Year 0: 0
- Year 1: 2,000
- Year 2: 3,000
- Year 3: 4,000
3. **Inventory:**
- Year 0: 8,000
- Year
Expert Solution
Step 1
Depreciation expense is the non-cash expense which shows the cash allocation of investment in fixed asset.
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