BUTLER LUMBER COMPANY

Income Statement
Operating Statements for Years Ending December 31, 1988-1990, and
for First Quarter 1991 (thousands of dollars)

Net sales
Cost of goods sold:
Beginning inventory
Purchases
Ending inventory
Total cost of goods sold
Gross Profit
Operating expenses
Interest expense
Net income before income taxes
Provision for income taxes
Net income

1st Qtr
1991

1988

1989

1990

$1,697

$2,013

$2,694

$183
$1,278
$1,461
$239
$1,222
$475
$425
$13
$37
$6
$31

$239
$1,524
$1,763
$326
$1,437
$576
$515
$20
$41
$7
$34

$326
$418
$2,042
$660
$2,368 $1,078
$418
$556
$1,950
$522
$744
$196
$658
$175
$33
$10
$53
$11
$9
$2
$44
$9

$718

BUTLER LUMBER COMPANY

Balnce Sheet
Balance Sheets at December 31, 1988-1990, and March 31, 1991 (thousands of dollars)
1988

1989

1990

1st Qrtr
1991

Cash
Accounts receivable, net
Inventory
Current assets
Property, net
Total assets

$58
$171
$239
$468
$126
$594

$49
$222
$325
$596
$140
$736

$41
$317
$418
$776
$157
$933

$31
$345
$556
$932
$162
$1,094

Notes payable, bank

Notes payable, Mr. Stark
Notes payable, trade
Accounts payable
Accrued expenses
Long-term debt, current portion
Current liabilities
Long-term debt
Total liabilities
Net worth
Total liabilities & net worth

$0
$105
$0
$124
$24
$7
$260
$64
$324
$270
$594

$146
$0
$0
$192
$30
$7
$375
$57
$432
$304
$736

$233
$0
$0
$256
$39
$7
$535
$50
$585
$348
$933

$247
$0
$157
$243
$36
$7
$690
$47
$737
$357
$1,094

COMMON SIZE STATEMENTS

Percentage of Sales
1988
Purchases
Cost of goods sold
Operating expenses
Cash
Accounts receivable
Inventory
Fixed assets (net)
Total assets
Accrued Expenses

75.3%
72.0%
25.0%
3.4%
10.1%
14.1%
7.4%
35.0%
1.4%

1989
75.7%
71.4%
25.6%
2.4%
11.0%
16.1%
7.0%
36.6%
1.5%

1990
75.8%
72.4%
24.4%
1.5%
11.8%
15.5%
5.8%
34.6%
1.4%

Average
75.6%
71.9%
25.0%
2.5%
11.0%
15.2%
6.7%
35.4%
1.5%

Percentage of Total Assets

1988
Current liabilities
Long-term liabilities
Equity

43.8%
10.8%
45.5%

1989
51.0%
7.7%
41.3%

1990
57.3%
5.4%
37.3%

Average
50.7%
8.0%
41.4%

PROJECTIONS FOR YEAR 1991

Projected income statement for 1991 (thousands of dollars)
1991
Net sales
Cost of goods sold:
Beginning inventory
Purchases

$ 3,600
$418
$2,722
$3,140
$550
$2,589
$1,008
$901
$107
$54
$40
$122
$30
$92

Ending inventory
Total cost of goods sold
Gross Profit
Operating expenses
Operating Profit
Purchase Discounts*
Interest expense**
Net income before income taxes
Provision for income taxes
Net income

Projected balance sheet for December 31, 1991 (thousands of dollars)

1991
Assets:
Cash
Accounts recievable, net (12% of sales)
Inventory
Current Assets
Property, net
Total Assets

$88
$394
$550
$1,033
$162
$1,195
`

Liabilities:
Accounts payable
Accrued expenses
Long-term debt, current portion
Provision for taxation
Bank note payable*
Current Liabilities
Long-term debt
Total Liabilities
Net worth
Total Liabilities plus net worth

$76
$52
$7
$30
$548
$712
$43
$755
$440
$1,195

* Bank note payable = (Total assets- Total liabilities except note payable - Net Worth)

$547.75

Assumptions
Value
$

Explanation

3,600 given in case

From Income Statement
75.61% historical % of sales
computed value (beg inv + purch - end inv)
71.93% historical % of sales
25.02% historical % of sales
2% assuming that payments are made within 10 days of purchase
based on the quaterly interest expense ($10*4)
as per given tax slab

2.46% average percent of sales

11% average percent of sales
computed value from above
assuming no other property is purchased after Q1

10 days of purchases
1.45% average % of sales
constant amortization
Balancing figure
repayment of $7000 p.a.
last year's balance plus current net income

WORKING CAPITAL ASSESSMENT

Curent Assets
Current Liabilities
Other Current liabilities
Working Capital Gap (=CA-OCL)
Current ratio (=CA/CL)

1988
468.00
260.00
253.00
215.00

1989
596.00
375.00
222.00
374.00

1990 1991(Projected)
776.00
1033.39
535.00
712.25
295.00
157.50
481.00
875.89

1.80

1.59

1.45

1.45

53.75
161.25

93.50
280.50

120.25
360.75

218.97
656.92

117.00
98.00

149.00
225.00

194.00
287.00

258.35
617.55

METHOD I
Margin (= 0.25 of WCG)
MPBF (= 0.75 of WCG)

METHOD II
Margin (= 0.25 of Current Assets)
MPBF [(0.75 of CA)- OCL]