TABLE 2-3

Industry 94
1994 1995 1996 1997 1998 Average* 10000
Assets
Cash & marketable
securities 1.30% 9.10% 20.80% 23.50% 32.40% 7.40% 130
Accounts receivable 27.1 22.7 22.4 18 16.8 22.7 2710
Inventories 46.1 42.9 35.4 34 28 37.1 4610
Prepaid expenses and 0
other current assets4.4 5.5 4.1 5.9 5.4 5.5 440
Total current assets 79 80.2 82.6 81.4 82.6 72 7900
Proper, plant, and 0
equipment 23.4 22.8 23.1 27.7 28 31.5 2340
Less accumulated 0
depriciation and 0
amortization 9 10.3 12.2 15.1 15.8 13.6 900
Net property, plant 0
and equipment 14.4 12.4 10.9 12.6 12.1 17.9 1440
Intangible assets 5.5 5.8 5 5 4.1 3.2 550
Other assets 1.1 1.6 1.5 1 1.2 6.9 110
Total assets ### ### ### ### ### ### 100

Liabilities and
shareholders' Equity
Accounts payable 7.80% 6.00% 4.70% 4.90% 5.50% 11.20% 780
Notes payable 4.8 2 480
Long-term debt due 0
in one year 1.7 1.8 4 1 170
Wages apyable 1.9 0.2 2.6 4.2 3.9 190
accrued expenses 6.4 8.5 11.3 14.5 11 10 640
Total current 0
Liabilities 22.6 16.5 22.7 23.6 20.4 24.2 2260
Long-term debt 43.7 47.3 38.2 23.8 21.3 14.8 4370
Deferred taxes 2.2 2.4 2.4 1.4 1.6 1 220
Total Liabilities 68.5 66.3 63.2 48.8 43.3 39.9 6850
Common stock 0 0 0 0 0 4.6 0
Additional paid in 0
capital 12.2 14.2 13.7 16.3 15.9 10.8 1220
Retained earnings 19.3 19.6 23 34.8 44.2 54.8 1930
Less: Treasury stock0 0 0 0 3.5 10.2 0
Total stockholders' 0
equity 31.5 33.7 36.8 51.2 56.7 60.1 3150
0
Total liabilities and 0
shareholders' equity
### 100% ### ### ### ### 100
TABLE 2-3 (Concluded)

Industry
1994 1995 1996 1997 1998 Average*

Net sales ### ### ### ### ### ###

Cost of sales 65 66.3 60.6 58.5 58.3 60.8 3250
Gross profit 35 33.7 39.4 41.5 41.7 39.2 1750
0
Selling, general, and 0
administrative 0
expenses 25.8 29.4 28.9 28.4 28.6 29.3 1290
Depriciation and 0
amortization 2.4 2.9 3.1 2.5 2.1 1.8 120
Total opening 0
expenses 28.2 32.3 32 31 30.7 31 1410
Operating income 6.8 1.4 7.4 10.5 11 8.2 340
Interest expense 2.4 3.5 3 1.9 1.1 0.7 120
Other expense 0
(income) 0.2 0.1 0.2 0.2 0.2 0
Extraordinary 0
expense(income) 0.6 0.4 0
0
Total nonoperating 0
expense 2.3 4.2 2.9 2 0.9 0.9 115
0
Income before 0
income taxes 4.4 2.9 4.5 8.5 10.1 7.3 220
0
Provision for income 0
taxes 1.6 1.1 1.5 2.5 3.2 2.7 80
Net income 2.8 1.8 3 5.9 6.9 4.6 140
 95 96 97 98 IG

94 95 96
910 2080 2350 3240 740 ROE= 0.04 0.03 0.04
2270 2240 1800 1680 2270 ROA= 0.01 0.01 0.02
4290 3540 3400 2800 3710 PR MG= 0.02 0.03 0.06
0 0 0 0
550 410 590 540 550 GM= 0.35 0.34 0.39
8020 8260 8140 8260 7200
0 0 0 0 0 SAL/ASST 0.5 0.5 0.5
2280 2310 2770 2800 3150 SAL/NP 2.14 2.19 2.16
0 0 0 0 0 INV/TR 0.7 0.77 0.86
0 0 0 0 0 AT/SE 3.17 2.97 2.72
1030 1220 1510 1580 1360 d/e 1.09 0.98 0.86
0 0 0 0 0
1240 1090 1260 1210 1790
580 500 500 410 320
160 150 100 120 690
100 100 100 100 100

600.00% 470.00% 490.00% 550.00% 1120.00%

0 0 0 0 200
0 0 0 0 0
180 400 0 0 100
20 260 420 390 0
850 1130 1450 1100 1000
0 0 0 0 0
1650 2270 2360 2040 2420
4730 3820 2380 2130 1480
240 240 140 160 100
6630 6320 4880 4330 3990
0 0 0 0 460
0 0 0 0 0
1420 1370 1630 1590 1080
1960 2300 3480 4420 5480
0 0 0 350 1020
0 0 0 0 0
3370 3680 5120 5670 6010
0 0 0 0 0
0 0 0 0 0
100 100 100 100 100
3315 3030 2925 2915 3040
1685 1970 2075 2085 1960
0 0 0 0 0
0 0 0 0 0
0 0 0 0 0
1470 1445 1420 1430 1465
0 0 0 0 0
145 155 125 105 90
0 0 0 0 0
1615 1600 1550 1535 1550
70 370 525 550 410
175 150 95 55 35
0 0 0 0 0
10 5 10 10 10
0 0 0 0 0
30 0 0 0 20
0 0 0 0 0
0 0 0 0 0
210 145 100 45 45
0 0 0 0 0
0 0 0 0 0
145 225 425 505 365
0 0 0 0 0
0 0 0 0 0
55 75 125 160 135
90 150 295 345 230
 97 98 IG
0.06 0.06 0.04
0.03 0.03 0.02
0.07 0.05 0

0.42 0.42 0.39

0.5 0.5 0.5

1.81 1.79 1.59
0.86 1.04 0.82
1.95 1.76 1.66
0.48 0.36 0.29
TABLE 3-4

Forecasting with a Computer Spreadsheet: Pro Forma Financial Forecast of R & E

Supplies, Inc., December 31, 2000($000)
A B C D
Year 1999 Actual 2000 2001
Net Sales $20,613
Growth rate in net sales 25% 30%
Cost of goods sold/net sales 86% % as in 1999
Gen., sell., and admin. Espenses/net sales 12% % as in 1999
Long-term debt $760 $660 $510
Repayment of Past Long Term Borrowings $150
Current portion long term debt $100 $100 $100
INT.Rate for Fresh Long term Borrowing 12%
Interest rate 10.00% 10.00%
Tax rate 45.00% 33.40%
Dividend/esrnings after tax 50.00% 30%
Dividend Tax Rate 10%
Current assets/net sales 29.00% % as in 1999
Net fixed assets $280 $270
Current liabilites/net sales 14.50% 14.60%
Onwers' equity $1,730
INCOME STATEMENT
Equations Forecast Forecast
Year 2000 2000 2001
Net sales $25,766.25 ###
Cost of goods sold/net sales $22,158.98 $25,766 ###
Gross profit $3,607.28 22,159 ###
Gen., sell., and admin. Espenses/net sales $3,091.95 3607 $4,019.54
Interest expenses 241 3092 63
Earnings before tax $274.33 241 $606.92
Tax $123.45 274 $202.71
Earnings after tax $150.88 123 $404.21
Dividends paid $75.44 151 $121.26
Dividend Tax Rate $12.13
Additions to retained earnings $75.44 75 $270.82

BALANCE SHEET
Current assets $7,472.21 7472 $9,713.88
Net fixed assets 280 280 270
Total assets $7,752.21 7,752 ###

Current liabilites $3,736.11 3,376 $4,890.43

Long-term debt $660 660 610
Equity $1,805.44 1,805 $2,076.26
Total liabilitiesand shreholders' equity $6,201.55 6,202 ###
EXTERNAL FUNDING REQUIRED 1,550 $1,551 ###
as in 1999
as in 1999

as in 1999
TABLE 2-3
10000 Industry
1994 1995 1996 1997 1998 Average* 1994
Assets
Cash & marketable
securities 1.30% 9.10% 20.80% 23.50% 32.40% 7.40%
Accounts receivable 27.1 22.7 22.4 18 16.8 22.7
Inventories 46.1 42.9 35.4 34 28 37.1
Prepaid expenses and
other current assets 4.4 5.5 4.1 5.9 5.4 5.5
Total current assets79 80.2 82.6 81.4 82.6 72
Proper, plant, and
equipment 23.4 22.8 23.1 27.7 28 31.5
Less accumulated
depriciation and
amortization 9 10.3 12.2 15.1 15.8 13.6
Net property, plant
and equipment 14.4 12.4 10.9 12.6 12.1 17.9
Intangible assets 5.5 5.8 5 5 4.1 3.2
Other assets 1.1 1.6 1.5 1 1.2 6.9
Total assets ### ### ### ### ### ###

Liabilities and
shareholders' Equity
Accounts payable 7.80% 6.00% 4.70% 4.90% 5.50% 11.20%
Notes payable 4.8 2
Long-term debt due
in one year 1.7 1.8 4 1
Wages apyable 1.9 0.2 2.6 4.2 3.9
accrued expenses 6.4 8.5 11.3 14.5 11 10
Total current
Liabilities 22.6 16.5 22.7 23.6 20.4 24.2
Long-term debt 43.7 47.3 38.2 23.8 21.3 14.8
Deferred taxes 2.2 2.4 2.4 1.4 1.6 1
Total Liabilities 68.5 66.3 63.2 48.8 43.3 39.9
Common stock 0 0 0 0 0 4.6
Additional paid in
capital 12.2 14.2 13.7 16.3 15.9 10.8
Retained earnings 19.3 19.6 23 34.8 44.2 54.8
Less: Treasury stock 0 0 0 0 3.5 10.2
Total stockholders'
equity 31.5 33.7 36.8 51.2 56.7 60.1

Total liabilities and

shareholders' equity### 100% ### ### ### ###
TABLE 2-3 (Concluded)

5000 Industry
1994 1995 1996 1997 1998 Average* 1994

Net sales ### ### ### ### ### ###

Cost of sales 65 66.3 60.6 58.5 58.3 60.8
Gross profit 35 33.7 39.4 41.5 41.7 39.2

Selling, general, and

administrative
expenses 25.8 29.4 28.9 28.4 28.6 29.3
Depriciation and
amortization 2.4 2.9 3.1 2.5 2.1 1.8
Total opening
expenses 28.2 32.3 32 31 30.7 31
Operating income 6.8 1.4 7.4 10.5 11 8.2
Interest expense 2.4 3.5 3 1.9 1.1 0.7
Other expense
(income) 0.2 0.1 0.2 0.2 0.2
Extraordinary
expense(income) 0.6 0.4

Total nonoperating
expense 2.3 4.2 2.9 2 0.9 0.9

Income before
income taxes 4.4 2.9 4.5 8.5 10.1 7.3

Provision for income

taxes 1.6 1.1 1.5 2.5 3.2 2.7
Net income 2.8 1.8 3 5.9 6.9 4.6
 10000 Industry
1995 1996 1997 1998 Average*

3240 740 Profitability Ratio : 1998

1680 2270 ROE = 0.06
2800 3710 ROA = 0.03
ROIC =
540 550 Profit Margin = 0.07
8260 7270 Gross Margin = 0.42
Price to earnings =
2800 3150
Turnover-Control Ratio :
Asset Turnover = 0.5
1580 1360 Fixed-asset turnover = 4.1
Inventory turnover = 1.04
1220 1790 Collection Period = 0.34
410 320 Days' sales in cash = 236.52
120 690 Payables period = 0.19
10010 10070
Leverage and Liquidity Ratio :
Assets to equity = 1.77
Debt to assets = 0.43
550 1120 Debt to equity = 0.77
200 Times interest earned = 10
Times burden covered =
100 Debt to assets ( Mkt.Price) =
390 Debt to equity (Mkt.Price) =
1100 1000 Current Ratio = 4.05
Acid Test = 2.68
2040 2420
2130 1480
160 100
4330 4000
460

1590 1080
4420 5480
350 1020

5660 6000

9990 10000
 5000 Industry
1995 1996 1997 1998 Average*Sales/Day

5000 5000 13.7

2915 3040
2085 1960

1430 1465

105 90

1535 1555
550 410
55 35

10 10

20

45 5

505 405

160 135
345 230
 Industry
Average*
0.04
0.02

0.05
0.39

0.5
2.79
0.82
0.45
54.02
0.37

1.68
0.4
0.67
11.71

3
1.47