*Think about blend of debt and equity.

Can change how many shares to issue

If not 1000 shares, will need to raise the rest (so equity and liabilities equal 180000)
Will need to record secured note to shareholder
3 year note
5% annual

BV Rate Dpr
0 40000 0.4
1 24000 0.4 16000
2 14400 0.4 9600 5,444.38
3 8640 0.4 5760
4 5184 0.4 3456
5 0 0.4 5184

Assigned Rec 185000

Fee 14800
Factor Payable 127650
Balance Sheet
2015
Cash
Accounts Rec
Allowance for bad debt
Assigned Rec
Subscriptions Receivable
Note Receivable
Note Receivable Discounted
Inventory
Equipment
A.D.

Total
Income Statement

2015

Svc Revenue
Product Revenue
COGS
GM
Depr
Bad debt expense
EBIT
Factor Fee
Loss on Note
Contingent loss
Gain on sale
Interest Exp
Interest Rev
Net Inc
Weight

1.2

Weight

0.6
 Forecast
Actual

Decision to assign receivable smeans you must have enough cash to cover the factor payable liabilities account that's created
Script dividend (debit to RE and credit to liability) pulls down retained earnings which pulls down alt-z score and pulled down w
Impact of script dividend is muted when you reduce % of EPS.
If you did not need as much cash, you would not need to discount note at end of year 1. Only reason you discounted originally
The faster you accelerate depreciation, the worse the Times Interest Earned ratio looks. But accelerated depreciation will mak
 2015
To record issue 1000 shares @ 10
180
To record 40000 Note @ 0.07
Amortize/dpr 5 years ddb on equipment purchase

Note Receivable 95000

Professional Service Revenue 95000
To record 6-Year note @ 0.09 95000
In Exchange for Professional Service Revenue

To record purchase of 400 units @

on account
To record sale of 360 units @
on account
To record 50000 Note @ 0.09
Amortize/dpr 5 years SL on equipment purchase

To Assign 185000 Receivables

Discount 0.25
Fee 0.08
Rate 0.11

Common scriptions offered

Shares 300
Subscription pr. 18
Cash received on subscriptions 3900

Declare script dividend on shares @ 0.35

of EPS Interest rate 0.08

To discount Note Receivable on last day of yr @ 0.18

2016

To record purchase of 550 units @

To settle 2015 Accounts Payable

To record sale of 375 units @

To record receipt of 115000 Assigned receivables

To record receipt of 70000 Receivables

To record purchase of 110 Treasury shares

To record sale of Equipment 1 38000 7/25/2016

To record sale of 70 Treasure shares

To record 70000 Cash dividend

To record declaration of 0.1 stock dividend @

Accounts Receivable Aging Summary

<30 30 - 60 61 - 90 90+
% 0.55 0.2 0.15 0.1
BD % 0.02 0.12 0.36 0.5

Note Rec 95000

Prof Svc Rev 95000
0.09

2016 2015
Accounts Payable
Contingent Payable
Payable to Factor
Note payable to shareholders
Current Portion

Note 1
Note2

Common
Common subscribable
Common distributable
Paid in excess
TS Stock
Pd in TS
Retained Earn

Total
 Cash Flows

2016 2015 2016

Net Income
Depr
Accts Rec
Assigned Rec
Allowance
Note Rec
Not Rec Disc
Loss add back
Gain subtract
Inventory
Accts Pay
Factor Pay
Contingent Pay
Opr Cash

Investing

Financing

Note 1
Note 2
Note Rec Disc
Dividend
Paid in
TS
Common Subsc.
Note sharehldrs

Beginning
Net Cash
Ending

Cash Flow Ratios (Year 2)

Income Quality
Cash from Operating Activities
Net Income

Times Interest Earned

EBIT
Interest Expense

Operating Cash/Total Debt Ratio

Cash from Operating Activities

Total Debt

Current Ratio

Current Assets
Current Liabilities

Altman Z- Score (Year 2)

Work Capital Weight Retained Earn

Total Assets Total Assets

1.4

Mkt Value of Equity Weight Sales

Total Assets Total Assets

Z-Score Interpretation:
> 3.0 Healthy, low probability of bankruptcy
1.80 - 2.99 Caution
< 1.80 High probability of bankruptcy
Receivables Ratios Year 2)

Collection Efficiency

Beg Rec + Cr Sales - Ending Rec

beg Rec + Cr Sales - Current Rec

Bad Debt Ratio

Shares Outstanding
Bad debt
Cr Sales
BV/Share
ROE
Percent Current EPS (BV/share * ROE)
EPS (Net/Shares Ost)
Current Rec
Tot Rec Payout Ratio
Plowback Ratio
Growth rate
Receivable/Sales Ratio
Dividend/share
Accts Rec Investor return rate
Total Revenue Share Price
Market Capitalization
Market Value Added
Plus 60 Ratio

Rec > 60 Days

Tot Rec

Accts Rec Turnover

Cr Sales
Ave Rec

Days in Receivables
 Ave Rec
Daily Cr Sls

Days Sales Outstanding

Accts Rec times Days in

Cr Sales Period

- 365.000
-

TA0/NS0 * ΔNS - (AP0 + LOC0 + AL0)/NS0 * ΔNS - NS1 * NI0/NS0 * Plowback

Build the cash flow forecast for outside funds, compare the forecast based on the formula above,
and discuss this firm''s strategy for raising cash.

yable liabilities account that's created upon assigning, which would then reduce your ability to pay dividends because excess cash has decr
ulls down alt-z score and pulled down working capital (note payable to shareholders) which pulled down dividend paying abilities

Only reason you discounted originally was to help meet cash minimum.
But accelerated depreciation will make NPV higher. Times Interest Earned = EBIT/Interest Expense, EBIDA Coverage = EBIDA/Interest Expe
par Subs Rec 180000
Mkt Common 10000
annual Paid in Excess 170000

Note Rec 95000

Prof Svc Rev 95000 8,550.00 $21,177.38 12,627.38
7,413.54 $21,177.38 13,763.84
6,174.79 $21,177.38 15,002.59
4,824.56 $21,177.38 16,352.82
3,352.80 $21,177.38 17,824.58
500 1,748.59 $21,177.38 19,428.79

875 Inventory $200,000.00

Acct Pay 200000
annual

Note Pay 50000

Equipment 50000

625

1100
192

205

205

2016
 -

Cash FlowAdequacy
Cash from Operating Activities
Capital Expenditures + Dividends

EBIDA Coverage

EBIDA
Interest Expense

Free Operating Cash Flow/Total Debt

Cash from Operating Activities - CAPEX

Total Debt

Quick Ratio

Liquid Current Assets -

Current Liabilities -

Weight EBIT
Total Assets

3.3

Z - Score
Beginning End

0.35
 ividends because excess cash has decreased.
own dividend paying abilities

EBIDA Coverage = EBIDA/Interest Expense

95,000.00
82,372.62
68,608.78
53,606.19
37,253.37
19,428.79
-

50,000.00
4,500.00 12,854.62 8,354.62 41,645.38
3,748.08 12,854.62 9,106.54 32,538.84
2,928.50 12,854.62 9,926.13 22,612.71
2,035.14 12,854.62 10,819.48 11,793.23
1,061.39 12,854.62 11,793.23 -
 Cash Inventory
180,000.00 200,000.00
127,650.00 180,000.00
$21,177.38
$66,225.29

COGS
180,000.00

Accts Rec
315,000.00
185,000.00

Equip
AR Assigned 40,000.00
185,000.00 50,000.00

Fee
11,100.00

Note Receivable
95,000.00
$12,627.38

Note Receivable Disc

82,372.62

Loss
16,147.33
 Common Date
10,000.00 -
1.00
2.00
3.00
Paid In Excess 4.00
170,000.00 5.00
6.00

Note 1 Note 2
40,000.00 50,000.00

Prof Svc Revenue Product Revenue

95,000.00 315,000.00

Interest Revenue
Accts Pay 8,550.00
200,000.00

Factor Payable
138,750.00
Interest Payment Amort Balance
95,000.00 0.09
8,550.00 $21,177.38 $12,627.38 82,372.62
7,413.54 $21,177.38 $13,763.84 68,608.78 $66,225.29
6,174.79 $21,177.38 $15,002.59 53,606.19
4,824.56 $21,177.38 $16,352.82 37,253.37
3,352.80 $21,177.38 $17,824.58 19,428.79
1,748.59 $21,177.38 $19,428.79 -

Date Rate Depreciation Book Value

- 40,000.00
1.00
2.00
3.00
4.00
5.00