CORPORATE FINANCIAL PLANNING

ACTUAL
Cutting Edge B2B Inc.
1997
1998
1999
2000
2001
2002
Finacial Plan
Actual
Actual
Actual
Actual
Forcast
Forcast
Key Assumption
Sales Growth Rate
24.3%
19.8%
16.0%
13%
Tax rate
43.5%
42.1%
37.9%
40%
40%
Int rate on short-term debt
6.70%
6.90%
7.10%
7.00%
6.90%
Int rate on long-term debt
7.90%
8.10%
8.30%
8.20%
8.10%
Dividend payout rate
35.0%
35.0%
35.0%
35%
35%
Price/earning
29.30
28.97
29.03
29.4
29.4
Income Statements (Mil. $)
Sales
COGs
Gross Margin

$ 93.28
$ 58.39
$ 34.89

$ 115.93
$ 75.49
$ 40.44

$ 138.84
$ 89.83
$ 49.01

$ 161.05
$ 103.30
$ 57.76

$ 181.99
$ 116.73
$ 65.27

Selling, Gen & Adm Expenses

Depreciation
EBIT

$
7.28
$
6.37
$ 21.24

$
8.56
$
7.31
$ 24.57

$ 10.21
$
9.86
$ 28.94

$ 12.10
$ 10.86
$ 34.79

$ 13.67
$ 12.28
$ 39.32

$ 11.37
$
9.37
$ 14.05
$ 59.87
$
0.23

$
$
$
$
$

Interest Expense
Taxes
Net Income
Shares Outstandings (Million)
Earnings per share

5.23
6.69
8.88
6.96
7.52
7.6
9.05 $ 10.36 $ 12.46
40.36
44.93
53.91
0.22 $
0.23 $
0.23

3.17
5.88 $

Allocation of net income

Dividends
Change in equity

3.63
6.73 $

4.36 $
8.10 $

4.92
9.13

12.22
10.84
16.25
65.67
0.25

$
5.69
$ 10.57

Balance sheet (Mil.$)

Assets
Current Assets
Cash & Equivalents
Receivables
Inventories
Total Current Asset

$
4.27
$ 20.58
$ 26.73
$ 51.58

$
6.38
$ 24.39
$ 30.45
$ 61.22

$
7.62
$ 28.77
$ 36.75
$ 73.14

$
8.83
$ 34.11
$ 43.27
$ 86.21

$
$
$
$

Property, Plan & Equipment (PPE)

Accumulated Depreciation
Net PPE

$ 331.64
$ 98.72
$ 232.92

$ 423.92
$ 105.09
$ 318.83

$ 503.87
$ 112.40
$ 391.47

$ 613.28
$ 122.26
$ 491.02

$ 687.76
$ 133.12
$ 554.64

$ 772.14
$ 145.40
$ 626.74

TOTAL ASSET

$ 284.50

$ 380.05

$ 464.61

$ 577.23

$ 657.07

$ 742.49

Liabilities and Shareholder's equity

Current Liabilities
Account Payable
Short-term debt
Total Current Liabilities

$ 31.83 $ 63.43 $ 83.84 $ 94.41

$ 30.86 $ 43.03 $ 64.85 $ 79.49
62.69
106.46
148.69 $ 173.90

$ 111.84
$ 85.53
$ 197.37

$ 126.37
$ 96.65
$ 223.02

Long-term debt
Total liabilities

$ 40.00
$ 102.69

$ 78.05
$ 275.42

$ 87.25
$ 310.27

$ 45.90
$ 152.36

$ 51.50
$ 200.19

$ 70.81
$ 244.71

10.61
40.55
51.27
102.44

$
$
$
$

11.99
45.82
57.94
115.75

Shareholder's Equity
Paid-in capital
Retained Earnings
Total shareholder's Equity

$ 90.00
$ 91.81
$ 181.81

$ 130.00
$ 97.69
$ 227.69

$ 160.00
$ 104.42
$ 264.42

$ 220.00
$ 112.52
$ 332.52

$ 260.00
$ 121.65
$ 381.65

$ 300.00
$ 132.22
$ 432.22

Total Liab. & Share. Equity

$ 284.50

$ 380.05

$ 464.61

$ 577.23

$ 657.07

$ 742.49

Debt/(Debt + Equity)
Market price/share
External Fund Needed
Income Statement (% of sales)
Sales
COGs
Gross Margin

28.0%
6.21

28.1%
30.6%
31.1%
30.0%
29.8%
6.57
6.68
6.71
6.90
7.28
$ 58.07 $ 57.42 $ 93.95 $ 53.28 $ 60.32

100.0%
62.6%
37.4%

100.0%
65.1%
34.9%

100.0%
64.7%
35.3%

100.0%
64.1%
35.9%

100.0%
64.1%
35.9%

Selling, Gen & Adm Expenses

Depreciation
EBIT

7.8%
6.8%
22.8%

7.4%
6.3%
21.2%

7.4%
7.1%
20.8%

7.5%
6.7%
21.6%

7.5%
6.7%
21.6%

Interest Expense
Taxes
Net Income
Shares Outstandings (Million)
Earnings per share

5.6%
7.5%
9.7%
43.3%
0.2%

5.8%
6.5%
8.9%
38.8%
0.2%

6.4%
5.5%
9.0%
38.8%
0.2%

7.1%
5.8%
8.7%
37.2%
0.1%

6.7%
6.0%
8.9%
36.1%
0.1%

3.4%
6.3%

3.1%
5.8%

3.1%
5.8%

3.1%
5.7%

3.1%
5.8%

6.8%
26.1%
32.6%
65.6%

6.6%
24.8%
31.7%
63.1%

6.4%
24.6%
31.2%
62.1%

6.6%
25.2%
31.8%
63.6%

6.6%
25.2%
31.8%
63.6%

Property, Plan & Equipment (PPE)

Accumulated Depreciation
Net PPE

454.5%
112.7%
341.8%

434.6%
97.0%
337.7%

441.7%
88.1%
353.7%

427.0%
82.7%
344.4%

424.3%
79.9%
344.4%

TOTAL ASSET

407.4%

400.8%

415.8%

408.0%

408.0%

Liabilities and Shareholder's equity

Current Liabilities
Account Payable
Short-term debt
Total Current Liabilities

68.0%
46.1%
114.1%

72.3%
55.9%
128.3%

68.0%
57.3%
125.3%

69.4%
53.1%
122.5%

69.4%
53.1%
122.5%

49.2%

44.4%

51.0%

48.5%

47.9%

Allocation of net income

Dividends
Change in equity
Balance sheet (% of sales))
Assets
Current Assets
Cash & Equivalents
Receivables
Inventories
Total Current Asset

Long-term debt

Total liabilities

163.3%

172.7%

176.3%

171.0%

170.5%

Shareholder's Equity
Paid-in capital
Retained Earnings
Total shareholder's Equity

139.4%
104.7%
244.1%

138.0%
90.1%
228.1%

158.5%
81.0%
239.5%

161.4%
75.5%
237.0%

164.8%
72.7%
237.5%

Total Liab. & Share. Equity

407.4%

400.8%

415.8%

408.0%

408.0%

Cash Flow Statement (Mil. $)

Cash Flow From Operating Activities
Net Income
+ Depreciation
- Increase in account receivables
- Increase in account inventories
+ Increase in account payable
Cash flow from operating activity

9.05
$
6.37
$ (3.81)
$ (3.72)
$ 31.60
39.49

10.36
$
7.31
$ (4.38)
$ (6.30)
$ 20.41
27.40

12.46
$
9.86
$ (5.34)
$ (6.52)
$ 10.57
21.03

14.05
$ 10.86
$ (6.44)
$ (8.00)
$ 17.43
27.90

16.25
$ 12.28
$ (5.27)
$ (6.67)
$ 14.54
31.13

Cash flow from Investing Activites

- Investment in plan & equipment
Cash flow from Investing Activity

$ (92.28) $ (79.95) $ (109.41) $ (74.48) $ (84.38)

$ (92.28) $ (79.95) $ (109.41) $ (74.48) $ (84.38)

Cash flow from Finacing Activities

+ Increase in long term debt
+ Increase in short term debt
+ Increase in paid in capital
- Dividend paid
Cash flow from financing activities

$
5.90
$ 12.17
$ 40.00
$ (3.17)
$ 54.90

Change in cash & Equivelant

Cash & Equivalent at Begin. Of year
Cash & Equivalent at End. Of year
Financial Ratios
Profitability
Return on sales (ROS)
Return on asset (ROA)
Return on Equity (ROE)

2.11
4.27
6.38

$
5.60
$ 21.82
$ 30.00
$ (3.63)
$ 53.79

1.24
6.38
7.62

$
$
$
$
$

19.31
14.64
60.00
(4.36)
89.59

1.21
7.62
8.83

$
7.24
$
6.04
$ 40.00
$ (4.92)
$ 48.37

1.78
8.83
10.61

$
9.20
$ 11.12
$ 40.00
$ (5.69)
$ 54.63
1.38
$ 10.61
11.99

22.8%
6.4%
4.4%

21.2%
5.8%
4.2%

20.8%
5.6%
4.2%

21.6%
5.6%
3.9%

21.6%
5.6%
4.0%

Asset Turnover
Receivable Turnover
Inventory Turnover
Asset Turnover

414.9%
204.2%
28.07%

436.2%
224.7%
27.45%

441.6%
224.5%
26.65%

431.4%
218.5%
26.10%

421.4%
213.8%
26.01%

Financial Lerverage
Debt
Times Interest Earned

23.4%
406.1%

25.0%
367.3%

26.0%
325.9%

24.9%
306.0%

24.8%
321.6%

57.5%
28.9%

49.2%
24.5%

49.6%
24.7%

51.9%
25.9%

51.9%
25.9%

Liquidity
Current
Quick

Maket Value
Price to earning
Maket to book value

29.30
116.5%

28.97
113.5%

29.03
108.8%

29.40
108.3%

29.40
110.6%

Data Table: Sensitivity of the External Funds to the Sales Growth Rate
Input values for Sales Growth Rate
Output Formula:
0%
4%
8%
12%
16%
External Fund needed
$ 53.28 $ (20.05) $ (1.72) $ 16.62 $ 34.95 $ 53.28

External Fund needed

External Fund needed by the Sales Growth

Rate
100
80
60
40
20
0
-20
-40
-0.05

0.05

0.15

Sales Growth Rate

2003 Ave. Hist.

Forcast
% of sales
11%
40%
6.80%
8.00%
35%
29.4

$ 202.01
$ 129.57
$ 72.45
$ 15.18
$ 13.63
$ 43.64
$
$
$
$
$

64.1%

7.5%
6.7%

13.55
12.04
18.05
69.79
0.26

$
6.32
$ 11.73

$
$
$
$

13.31
50.86
64.31
128.49

6.6%
25.2%
31.8%

$ 854.71
$ 159.03
$ 695.68

443.6%
99.2%
344.4%

$ 824.17

$ 140.27
$ 107.28
$ 247.56
$ 102.66
$ 350.21

69.4%
53.1%

$ 330.00
$ 143.95
$ 473.95
$ 824.17
30.7%
7.60
$ 56.04

100.0%
64.1%
35.9%

100.0%
64.1%
35.9%

7.5%
6.7%
21.6%

7.5%
6.7%
21.6%

6.7%
6.0%
8.9%
34.5%
0.1%

5.9%
6.5%
9.2%
40.3%
0.2%

3.1%
5.8%

3.2%
6.0%

6.6%
25.2%
31.8%
63.6%

6.6%
25.2%
31.8%
63.6%

423.1%
78.7%
344.4%

443.6%
99.2%
344.4%

408.0%

408.0%

69.4%
53.1%
122.5%

69.4%
53.1%
122.5%

50.8%

48.2%

173.4%

170.8%

163.4%
71.3%
234.6%

145.3%
91.9%
237.2%

408.0%

408.0%

18.05
$ 13.63
$ (5.04)
$ (6.37)
$ 13.90
34.17

$ (82.57)
$ (82.57)

$
$
$
$
$

15.41
10.63
30.00
(6.32)
49.72

1.32
$ 11.99
13.31

21.6%
5.6%
4.0%

417.9%
212.0%
25.79%

25.5%
322.0%

51.9%
25.9%

29.40
112.0%

20%
24%
$ 71.62 $ 89.95

he Sales Growth

0.25