McGovern Distributing Inc.

Income Statements
2001% of sales
2002E
2001
Sales
100.0% $
7,625,000 $6,100,000
Cost of Goods Sold
80.0%
$ 6,100,000
4,880,000
Gross Profit
20.0%
$ 1,525,000
1,220,000
Salaries
10.0%
$
762,500
610,000
Utilities
0.3%
$
20,000
16,000
Other Expenses
1.0%
$
76,250
61,000
Depreciation
0.2%
$
15,000
15,000
Earnings Before Interest and Taxes
8.5%
$
647,500
518,000
Interest Paid
1.2%
$
73,455
73,455
Earnings Before Taxes
7.3%
$
555,681
444,545
Taxes
2.6%
$
194,488
155,591
Net Income
4.7%
$
361,193
288,954
Dividends Paid
0
Growth Rate
25%

2000
1999
$4,880,000 $4,000,000
3,904,000 3,200,000
976,000
800,000
488,000
400,000
14,000
12,000
48,800
40,000
15,000
15,000
410,200
333,000
61,000
46,000
349,200
287,000
122,220
100,450
226,980
186,550
0

McGovern Distributing Inc.

Income Statements
2001
2000
1999
Sales
$6,100,000 $4,880,000 $4,000,000
Cost of Goods Sold
4,880,000 3,904,000 3,200,000
Gross Profit
1,220,000
976,000
800,000
Salaries
610,000
488,000
400,000
Utilities
16,000
14,000
12,000
Other Expenses
61,000
48,800
40,000
Depreciation
15,000
15,000
15,000
Earnings Before Interest and Taxes
518,000
410,200
333,000
Interest Paid
73,455
61,000
46,000
Earnings Before Taxes
444,545
349,200
287,000
Taxes
155,591
122,220
100,450
Net Income
288,954
226,980
186,550
Dividends Paid
0
0
McGovern Distributing Inc.
Balance Sheets
2001
Assets
Cash and Cash Equivalents
Accounts Receivable
Inventory
Total Current Assets
Gross Fixed Assets
Accumulated Depreciation
Net Plant & Equipment
Total Assets
Liabilities and Owner's Equity
Accounts Payable
Bank Loan @ 10% per year
Other Current Liabilities
Total Current Liabilities
Long-term Debt
Total Liabilities
Owner's Capital
Retained Earnings
Total Liabilities and Owner's Equity

Current Liab (No debt)

Inventory as a % of Current assets

2000

1999

$57,154
700,000
$1,000,000
1,757,154
750,000
145,000
605,000
2,362,154

$48,800
600,000
$619,847
1,268,647
750,000
130,000
620,000
1,888,647

160,000
450,000
300,000
910,000
750,000
115,000
635,000
1,545,000

$350,000
574,553
80,000
$1,004,553
200,000
1,204,553
$355,117
802,484
2,362,154

$300,000
450,000
70,000
$820,000
200,000
1,020,000
$355,117
513,530
1,888,647

$200,000
300,000
50,000
$550,000
200,000
750,000
$508,450
286,550
1,545,000

$2,362,154
$0
430,000
56.91%

$1,888,647
$0
370,000
48.86%

$1,545,000
250,000
32.97%

Month

0.35

ITO
Inv. Period
RTO
ACP
PTO
Pay.Period

NWC

0.35

Oct-01
Nov-01
Dec-01
Jan-02
Feb-02
Mar-02
Apr-02
May-02
Jun-02
Jul-02
Aug-02

0.35

Collection Schedule
<30 days
20%

Sep-02
Oct-02
Nov-02
Dec-02

2001

2000

31-60 days

40%

Jan-03

6.02526041
60.57829457
9.384615385
38.89344262
3.753846154
97.23360656

2.122092
172.0001
2.32381
157.0697
$3.90
93.49385

61-90 days
Bad Debts

40%
3%

Feb-03

$752,601 $448,647 $360,000

Actual Sales

Expected Sales

400,000
450,000
600,000
-------------------------------------------------------------

---------------300,000
400,000
500,000
500,000
500,000
600,000
700,000
600,000
700,000
800,000
$7,625,000.00
825,000
1,200,000 7,625,000
$0.00

------

350,000

------

450,000

OCT
NOV
DEC JAN
Sales

300,000

Bad Debts

9,000

FEB

MAR

APR

MAY

JUN

JUL

400,000

500,000

500,000

500,000

600,000

700,000

12,000

15,000

15,000

15,000

18,000

21,000

Collections
<30 days

116400

58200

77600

97000

97000

97000

116400

31-60days

174600

232800

116400

155200

194000

194000

194000

61-90 days

155200

174600

232800

116400

155200

194000

194000

Total Inflows

446200

465600

426800

368600

446200

485000

504400

NOV
DEC JAN

FEB

MAR

APR

MAY

JUN

JUL

Purchases

320000

400000

400000

400000

480000

560000

480000

Payments

360000

480000

240000

320000

400000

400000

400000

Salaries

63,542

63,542

63,542

63,542

63,542

63,542

63,542

Utilities

1,667

1,667

1,667

1,667

1,667

1,667

1,667

Interest

6,121

6,121

6,121

6,121

6,121

6,121

6,121

Other expenses

6,354

6,354

6,354

6,354

6,354

6,354

6,354

Taxes

48,622

48,622

New Truck

40,000
`

Total Payments

437683.775

557683.775

526305.8516

477683.775

Net C. Flows

8516.225 -92083.775 60494.1484 -29083.775 -71483.775 -41305.8516

26716.225

JAN

366305.8516

FEB

397683.775

MAR

517683.775

APR

MAY

JUN

JUL

Total Inflows

446,200

465,600

426,800

368,600

446,200

485,000

504,400

437,684

Total Payments

557,684

366,306

397,684

517,684

526,306

477,684

Beginning Cash Balance

70,000

70,000

70,000

70,000

70,000

70,000

Net Cash Flow

8,516

(92,084) $

60,494

Borrowing

61,484

92,084

512

1,280

70,000

70,000

Interest on short-term borrowing

(60,494) $

(29,084) $

(71,484) $

(41,306) $

26,716

29,084

71,484

41,306

(26,716)

776

1,018

1,614

1,958

70,000

70,000

70,000

70,000

Short-term borrowing repaid

Ending Cash Balance

Minimum Cash Balance

Cumulative Surplus or deficit

70,000
-70,000

-70,000

-70,000

-70,000

-70,000

-70,000
$

-70,000
$

Cumulative Surplus or deficit

Beginning Short term borrowing

61,484

153,568

93,073

122,157

193,641

Change in short term debt

61,484

92,084

(60,494) $

29,084

71,484

41,306

(26,716)

Ending Short-term debt

61,484

153,568

122,157

193,641

234,947

208,231

93,073

234,947

Minimum Cash Balance

Maximum Cash Balance
Interest rate on ST debt

None: cash in excess of $70,000 is first used to pay off short-term debt and then invested. None of the months
are projected to have surplus funds for investing.

AUG

SEP

OCT

NOV

DEC

JAN

600,000

700,000

800,000

825,000

1,200,000

FEB

350,000

450,000

18,000

21,000

24,000

24,750

36,000

10,500

13,500

135800

116400

135800

155200

160050

232800

67900

232800

271600

232800

271600

310400

320100

465600

194000

232800

271600

232800

271600

310400

320100

562600

620800

640200

659600

742050

863300

7,625,000

381250

953125

AUG

SEP

OCT

NOV

DEC

140000

JAN

560000

640000

660000

960000

280000

360000

480000

560000

480000

560000

640000

660000

960000

63,542

63,542

63,542

63,542

63,542

63,542

63,542

1,667

1,667

1,667

1,667

1,667

1,667

6,121

6,121

6,121

6,121

6,121

6,121

6,354

6,354

6,354

6,354

6,354

6,354

48,622

557683.775

48,622

686305.8516

557683.775

4916.225 -65505.8516

82516.225

AUG

SEP

637683.775

766305.8516

737683.775

21916.225 -24255.8516 125616.225

OCT

NOV

DEC

JAN

562,600

620,800

640,200

659,600

742,050

863,300

557,684

686,306

557,684

637,684

766,306

737,684

70,000

70,000

70,000

70,000

70,000

70,000

4,916

(65,506) $

82,516

21,916

(24,256) $

125,616

65,506

24,256

1,735

1,694

2,240

1,553

1,370

1,572

70,000

(4,916) $

70,000

70,000

70,000

70,000

70,000

-70,000
$
$

208,231

$
$

571875

-70,000
$

(21,916) $

-70,000
$

-70,000
$

203,314

268,820

164,388

188,644

65,506

(82,516) $

(21,916) $

24,256

(125,616)

268,820

186,304

164,388

188,644

63,027

186,304

$
$

-70,000

(125,616)

(4,916) $
203,314

None of the months

-70,000

(82,516) $

5,320,000
762,500
1,667
20,000
6,121
73,455
6,354
76,250
194,488

Current Ratio
Quick Ratio
Cash Ratio
Total Debt Ratio
Debt-Equity Ratio
Equity Multiplier
Times Interest Ratio
Cash Coverage Ratio
Inventory Turnover ratio
Day's sales in Inventory
Receivables Turnover
ACP or Days' Sales in Receivables
Fixed Asset Turnover
Total Asset Turnover
Capital Intensity
Profit Margin
ROA
ROE
Net Working Capital to Total Assets
Interval measure

2001
1.75
0.75
0.06
0.51
1.04
2.04
7.05
7.26
6.03
60.58
9.38
38.89
10.08
2.58
0.39
4.74%
12.23%
24.96%
31.86%
115.21

DuPont Analysis
PM
TAT
EM
ROA
ROE

2001
2000
1999
4.74%
4.65% 4.66%
2.58
2.58
2.59
2.04
2.17
1.94
12.23% 12.02% 12.07%
24.96% 26.13% 23.47%

#VALUE!

2000
1999 COMMENTS
1.55
1.65 improving liquidity
0.79
1.11 declining
0.06
0.29 Cosiderably lower since 1999
0.54
0.49 down
1.17
0.94 down
2.17
1.94 reduced leverage
6.72
7.24 improved
6.97
7.57 lower than 1999
8.49
na reduced significantly
43.00
na increased quite a bit
9.30
na fairly stable
39.27
na stable
7.87
6.30 significantly improved
2.58
2.59 stable
0.39
0.39 no change
4.65% 4.66% improved
12.02% 12.07% improved
26.13% 23.47% dropped slightly
23.75% 23.30% improving liquidity
103.95
90.95 has improved

1,327,154 898,647 660,000

COMMENTS
improved
fixed asset turnover has offset deteriorating ITO
reduced
improved due to better net profit margin
deteriorated due to reduction of debt level

deteriorating ITO

2001

2000

288,954
15,000

226,980
15,000

50000
0
10000

100000
0
20000

100000
380153
-116,199

150000
319847
-107,867

0
0
0

0
0
0

Dividends Paid
New Bank Loans
New Long-term debt
New Stock
Net Cash Flow from Financing

0
124553
0
0
124553

0
150000
0
-153333
-3333

Change in Cash Balance

Beginning Cash Balance
Ending Cash Balance

8,354
48800
57,154

-111,200
160000
48,800

CASH FLOW FROM OPERATIONS

Net Income
Plus Depreciation
Plus Increase in Current Liabilities
Increase in Payable
Increase in Accrued expenses
Increase in other current liabilities
Plus Decrease in Current Assets
NONE
Minus Decrease in Current Liabilities
NONE
Minus Increase in Current Assets
Increase in A/R
Increase in Inventories
Equals Cash Flow from Operations
CASH FLOW FROM INVESTMENTS
Increase in Gross Fixed Assets
Sale of Assets
Net Investment Cash Flow
CASH FLOW FROM FINANCING

1999

Cash Flow From Assets

2001

2000

Earnings Before Interest And Taxes

Add Depreciation
Less Taxes
Equals Operating Cash Flow

518,000
15,000
155,591
377,409

410,200
15,000
122,220
302,980

Ending Net Fixed Assets

Less Beginning NFA
Add Depreciation
Equals Net Capital Spending

605,000
620,000
15,000
0

620,000
635,000
15,000
0

1,327,154
898,647
428,507

898,647
660,000
238,647

-51,098

64,333

73,455
124,553
-51,098

61,000
150,000
-89,000

0
0
0

0
-153333
153333

-51,098

64,333

Ending Net Working Capital

Less Beginning Net Working Capital
Equals Change in NWC
Cash Flow From Assets

Cash Flow to Creditors and Stockholders

Cash Flow to Creditors
Interest paid
Less Net New Borrowing
Equals Cash Flow to Creditors
Cash flow to Stockholders
Dividends paid
Less net new equity raised
Equals Cash Flow to S/H

Cash Flow to Creditors and Shareholders

McGovern Distributing Inc.

Balance Sheets
S/U
Assets
Cash and Cash Equivalents
Accounts Receivable
Inventory
Total Current Assets
Gross Fixed Assets
Accumulated Depreciation
Net Plant & Equipment
Total Assets
Liabilities and Owner's Equity
Accounts Payable
Bank Loan @ 10% per year
Other Current Liabilities
Total Current Liabilities
Long-term Debt
Total Liabilities
Owner's Capital
Retained Earnings
Total Liabilities and Owner's Equity

Sum of Sources
Sum of Uses

Change
2001
2001

2001

2000

1999

Use
Use
Use
na
0
Source
na
na

$8,354
$100,000
$380,153
$488,507
$0
$15,000
-$15,000
$473,507

$57,154 $48,800 160,000

700,000 600,000 450,000
$1,000,000 $619,847 300,000
1,757,154 1,268,647 910,000
750,000 750,000 750,000
145,000 130,000 115,000
605,000 620,000 635,000
2,362,154 1,888,647 1,545,000

Source
Source
Source

$50,000
$124,553
$10,000
$184,553
$0
$0
$0
$288,954
$473,507

$350,000 $300,000 $200,000

574,553 450,000 300,000
80,000
70,000
50,000
$1,004,553 $820,000 $550,000
200,000 200,000 200,000

Source

$488,507
$488,507

$355,117 $355,117 $508,450

802,484 513,530 286,550
2,362,154 1,888,647 1,545,000

Change S/U
2000
2000
$111,200
$150,000
$319,847
$358,647
$0
$15,000
-$15,000
$343,647

Source
Use
Use

$100,000
$150,000
$20,000
$270,000
$0
$0
$153,333
$226,980
$343,647

Source
Source
Source

Source

Use
Source

$623,180
$623,180