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This spreadsheet supports STUDENT analysis of the
case, "Aurora Textile Company"
(Case 21)
1999
2000
2001
2002
187,673
1.3103
0.4447
0.7077
190,473
1.2064
0.4421
0.6429
151,893
1.2045
0.4465
0.6487
144,116
1.0235
0.4296
0.4509
$245,908
132,812
83,454
216,267
29,641
14,603
15,241
(203)
6,777
(6,980)
(2,513)
($4,467)
($11,106)
($7,020)
2000
2001
2002
$1,144
17,322
34,778
2,774
$56,018
$5,508
11,663
33,155
1,922
$52,247
$2,192
20,390
31,313
712
$54,608
$1,973
26,068
33,278
2,378
$63,697
2,654
32,729
230,759
266,142
(147,891)
118,250
1,180
3,516
$178,965
2,594
31,859
220,615
255,068
(147,104)
107,964
1,180
3,499
$164,890
2,516
30,308
197,889
230,713
(146,302)
84,411
1,180
2,824
$143,023
2,505
30,427
190,410
223,342
(154,658)
68,684
1,180
2,430
$135,991
Liabilities
Accounts payable
Accrued compensation and benefits
Accrued interest
Other accrued expenses
Current portion of long-term debt
Total Current Liabilities
Long-term debt
Other long-term liabilities
Total Liabilities
12,236
4,148
1,830
4,083
1,009
$23,306
66,991
16,566
$106,863
7,693
3,712
1,090
3,914
1,730
$18,139
66,991
14,081
$99,211
9,667
4,176
961
3,881
0
$18,685
58,000
11,776
$88,461
10,835
4,730
929
3,657
0
$20,151
58,000
10,297
$88,448
50
15,868
56,184
50
15,678
50
15,668
50
15,668
49,951
$65,679
$164,890
38,845
$54,563
$143,023
31,825
$47,543
$135,991
Assets
Cash and cash equivalents
Accounts receivable, net
Inventories
Other current assets
Total Current Assets
Shareholder's equity
Common stock, par $0.01
Capital surplus
Retained earnings
Total Shareholders' Equity
Total Liabilities and Shareholders' Equity
$72,102
$178,965
(595,955)
Technology
Ring
Rotor
Rotor
Rotor
Product Mix
100% Cotton
100% Cotton
Heather and Poly/Cotton Blends
100% Cotton
Existing
machine
$5.0
$25.0
5.0
1.50%
7.50%
$0.077
Zinser
Price of Yarn Sold $10.0
Reimbursement cost $75.0
Liability multiplier
7.5
Returns as % of Volume 1.00%
Returns as % of Revenue 7.50%
Returns as cost/lb $0.084
Calculation
(25/5)
(5 x 1.5%)
(7.5% x $1.0235/lb)
Calculation
(75/10)
(7.5 x 1.0%)
(7.5% x $1.0235/lb x 110%)
2 / 98 8 / 98 2 / 99 8 / 99 2 / 00 8 / 00 2 / 01
Month
5 / 02
6 / 02
7 / 02
8 / 02
9 / 02
10 / 02
11 / 02
12 / 02
32.04
43.77
45.23
45.10
42.30
41.79
47.50
45.98
9 2 / 00 8 / 00 2 / 01 8 / 01 2 / 02 8 / 02
Month
1.24%
3.98%
4.83%
Industrials (% yield)
Prime rate1
AAA (10-year)
AA (10-year)
A (10-year)
BB (10-year)
BBB (10-year)
4.25%
4.60%
4.66%
4.87%
5.60%
6.90%
The prime rate was the short-term interest rate charged by large U.S. banks
for corporate clients with strong credit ratings.
1
Days' sale in inventory
1999
2000
58.6965386234 58.5539373242
25.7109640635 18.5255428128
1.3740544637
1.393571895
($0.018)
($0.027)
-0.0008252128
-0.017882248
($0.025)
($0.038)
($0.062)
($0.095)
$2,000,000
$500,000
3 Status quo
2002
0
1.02
0.45
0.43
500,000.00
2003
1
1.03
0.46
0.43
510,000.00
26,000,000.00
26,611,000.00
26,520,000.00
27,414,652.20
11,723,400.00
11,180,000.00
3,707,600.00
1,862,770.00
12,077,446.68
11,517,636.00
3,819,569.52
1,919,025.65
500,000.00
1,400,543.87
504,195.79
500,000.00
1,396,348.07
Gross Margin
SG&A cost
Depreciation and amortization
EBIT
Tax (36%)
Add Depreciation
OCF
Working capital
Change in net working capital
Opportunity cost of old equipment
Cash flow
NPV
Discount rate
1,844,830.00
664,138.80
1,180,691.20
963,567.12
(963,567.12)
-1,040,000
(2,003,567.12)
6,746,011.60
10%
992,666.85
(29,099.73)
1,367,248.35
Zinser
2002
0
1.13
0.41
0.4509
475,000.00
2003
1
1.14
0.41
0.46
484,500.00
24,700,000.00
27,808,495.00
25,194,000.00
28,648,311.55
11,137,230.00
10,052,900.00
6,618,365.00
1,946,594.65
11,473,574.35
10,356,497.58
6,818,239.62
2,005,381.81
500,000.00
4,312,857.81
1,552,628.81
500,000.00
3,260,229.00
Gross Margin
SG&A cost
Depreciation and amortization
EBIT
Tax (36%)
Add Depreciation
OCF
Working capital
Change in net working capital
Opportunity cost of old equipment
Cash flow
NPV
Discount rate
4,671,770.35
1,681,837.33
2,989,933.02
915,388.77
(915,388.77)
-500,000
(1,415,388.77)
20,184,566.19
10%
943,033.51
(27,644.74)
3,232,584.26
2001
2002
68.7023634256 95.7201348418
40.6785558175 64.5060620778
1.2792024663 1.0846522412
($0.061)
($0.048)
-0.0340720278 0.0030141002
($0.078)
($0.052)
($0.204)
($0.148)
2004
2
1.04
0.46
0.44
520,200.00
2005
3
1.05
0.46
0.44
530,604.00
2006
4
1.07
0.47
0.45
541,216.08
2007
5
1.08
0.47
0.45
552,040.40
2008
6
1.09
0.48
0.46
563,081.21
2009
7
1.10
0.48
0.46
574,342.83
27,050,400.00
28,242,574.70
27,591,408.00
29,095,500.45
28,143,236.16
29,974,184.57
28,706,100.88
30,879,404.94
29,280,222.90
31,811,962.97
29,865,827.36
32,772,684.25
12,442,185.57
11,865,468.61
3,934,920.52
1,976,980.23
500,000.00
1,457,940.29
524,858.50
500,000.00
1,433,081.79
12,817,939.57
12,223,805.76
4,053,755.12
2,036,685.03
500,000.00
1,517,070.09
546,145.23
500,000.00
1,470,924.86
13,205,041.35
12,592,964.69
4,176,178.52
2,098,192.92
500,000.00
1,577,985.60
568,074.82
500,000.00
1,509,910.79
13,603,833.60
12,973,272.23
4,302,299.12
2,161,558.35
14,014,669.37
13,365,065.05
4,432,228.55
2,226,837.41
14,437,912.39
13,768,690.01
4,566,081.85
2,294,087.90
2,140,740.77
770,666.68
2,205,391.14
793,940.81
2,271,993.95
817,917.82
1,370,074.09
1,411,450.33
1,454,076.13
1,022,645.39
(29,978.54)
1,053,529.28
(30,883.89)
1,085,345.86
(31,816.58)
1,118,123.31
(32,777.45)
1,151,890.63
(33,767.32)
1,186,677.73
(34,787.10)
1,403,103.25
1,440,040.97
1,478,094.20
1,337,296.65
1,377,683.01
1,419,289.03
2004
2
1.15
0.42
0.46
494,190.00
2005
3
1.16
0.42
0.46
504,073.80
2006
4
1.17
0.42
0.47
514,155.28
2007
5
1.18
0.43
0.47
524,438.38
2008
6
1.20
0.43
0.48
534,927.15
2009
7
1.21
0.44
0.48
545,625.69
25,697,880.00
29,513,490.56
26,211,837.60
30,404,797.97
26,736,074.35
31,323,022.87
27,270,795.84
32,268,978.16
27,816,211.76
33,243,501.30
28,372,535.99
34,247,455.04
11,820,076.29
10,669,263.81
7,024,150.46
2,065,944.34
500,000.00
4,458,206.12
1,604,954.20
500,000.00
3,353,251.92
12,177,042.60
10,991,475.57
7,236,279.80
2,128,335.86
500,000.00
4,607,943.95
1,658,859.82
500,000.00
3,449,084.13
12,544,789.28
11,323,418.14
7,454,815.45
2,192,611.60
500,000.00
4,762,203.85
1,714,393.39
500,000.00
3,547,810.47
12,923,641.92
11,665,385.36
7,679,950.88
2,258,828.47
13,313,935.90
12,017,680.00
7,911,885.40
2,327,045.09
13,716,016.77
12,380,613.94
8,150,824.34
2,397,321.85
5,421,122.41
1,951,604.07
5,584,840.31
2,010,542.51
5,753,502.48
2,071,260.89
3,469,518.34
3,574,297.80
3,682,241.59
971,513.12
(28,479.61)
1,000,852.82
(29,339.70)
1,031,078.57
(30,225.76)
1,062,217.14
(31,138.57)
1,094,296.10
(32,078.96)
1,127,343.84
(33,047.74)
3,324,772.31
3,419,744.43
3,517,584.71
3,438,379.77
3,542,218.84
3,649,193.85
2010
8
1.11
0.49
0.47
585,829.69
2011
9
1.12
0.49
0.47
597,546.28
2012
10
1.13
0.50
0.47
609,497.21
30,463,143.91
33,762,419.32
31,072,406.78
34,782,044.38
31,693,854.92
35,832,462.12
14,873,937.34
14,184,504.45
4,703,977.52
2,363,369.35
15,323,130.25
14,612,876.49
4,846,037.64
2,434,743.11
15,785,888.78
15,054,185.36
4,992,387.98
2,508,272.35
2,340,608.17
842,618.94
2,411,294.54
868,066.03
2,484,115.63
894,281.63
1,497,989.23
1,543,228.50
1,589,834.00
1,222,515.40
(35,837.67)
1,259,435.36
(36,919.97)
1,297,470.31
(38,034.95)
1,462,151.56
1,506,308.54
1,551,799.06
Inflation
1%
2010
8
1.22
0.44
0.49
556,538.21
2011
9
1.23
0.45
0.49
567,668.97
2012
10
1.24
0.45
0.50
579,022.35
28,939,986.71
35,281,728.18
29,518,786.44
36,347,236.38
30,109,162.17
37,444,922.91
14,130,240.47
12,754,508.48
8,396,979.23
2,469,720.97
14,556,973.74
13,139,694.63
8,650,568.00
2,544,306.55
14,996,594.34
13,536,513.41
8,911,815.16
2,621,144.60
5,927,258.26
2,133,812.97
6,106,261.46
2,198,254.12
6,290,670.55
2,264,641.40
3,793,445.29
3,908,007.33
4,026,029.15
1,161,389.63
(34,045.78)
1,196,463.59
(35,073.97)
1,232,596.80
(36,133.20)
3,759,399.50
3,872,933.37
3,989,895.95
Inflation
1%