1. Using the data in the student spreadsheet file Ethan Allen Financials.xlsx (to find the student...

  

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1. Using the data in the student spreadsheet file Ethan Allen Financials.xlsx (to find the student spreadsheets for Financial Analysis with Microsoft Excel, eighth edition, go to www.cengagebrain.com) forecast the June 30, 2017 income statement and balance sheet for Ethan Allen. Use the percent of sales method and the following assumptions: (1) sales in FY 2017 will be $797.3359; (2) the tax rate will be 35%; (3) each item that changes with sales will be the five-year average percentage of sales; (4) net fixed assets will increase to $300; and (5) the common dividend will be $0.75 per share. Use your judgment on all other items. a. What is the discretionary financing needed in 2017? Is this a surplus or deficit? b. Assume that the DFN will be absorbed by long-term debt and that the interest rate is 4% of LTD. Set up an iterative worksheet to eliminate it. Create a chart of cash versus sales and add a trend line. Is cash a consistent percentage of sales? Does this fit your expectations? d. Use the regression tool to verify your results from part c. Is the trend statistically significant? Use at least three methods from the regression output to show why or why not. e. Turn off iteration and use the Scenario Manager to set up three scenarios: 1) Best Case-Sales are 5% higher than expected. 2) Base Case-Sales are exactly as expected. 3) Worst Case-Sales are 5% less than expected. What is the DFN under each scenario? Ethan Allen Interiors Inc. Balance Sheet (Industrial) All figures in millions of U.S. Dollar, except per share items Jun '16 Jun '15 Jun '14 Jun '13 Jun '12 Assets Cash Only Total Short Term Investments Short-Term Receivables 52.659 0.000 76.182 109.176 72.601 79.721 2.198 18.153 15.529 9.005 9.467 Inventories 162.323 12.547 12.426 12.277 14.919 151.916 146.275 137.256 155.739 Other Current Assets 23.755 Total Current Assets 248.204 27.831 19.599 22.907 23.408 270.674 305.629 260.570 Property, Plant & Equipment - Gross 598.264 594.912 601.709 594.385 282.792 587.368 Accumulated Depreciation 324.649 Net Property, Plant & Equipment 317.877 313.553 302.713 291.673 273.615 277.035 288.156 291.672 295.695 Other Long-Term Assets 55.590 Total Assets 577.409 59.599 607.308 60.649 65.043 66.301 654.434 617.285 644.788 Liabilities & Shareholders' Equity ST Debt & Curr. Portion LT Debt 3.001 3.341 0.501 0.480 0.250 Accounts Payable 15.437 18.946 24.320 22.995 Other Current Liabilities 104.909 118.682 111.226 109.464 27.315 123.512 Total Current Liabilities Long-Term Debt Other Liabilities Total Liabilities 38.837 23.023 185.207 123.347 140.969 136.047 74.227 130.411 21.577 20.509 236.773 132.939 151.077 130.809 154.250 19.180 17.593 286.967 282.928 322.920 Common Stock Par/Carry Value 0.489 0.489 0.486 0.486 0.485 Additional Paid-In Capital/Capital Surplus 374.972 370.914 365.733 363.938 361.165 Retained Earnings 646.315 607.079 584.395 553.083 542.918 Treasury Stock and Other Deductions from Equity 629.574 607.947 583.147 583.150 582.700 Total Shareholders' Equity 392.202 370.535 367.467 334.357 321.868 Total Liabilities & Shareholders' Equity 577.409 607.308 654.434 617.285 644.788 Ethan Allen Interiors Inc. Income Statement (Industrial) All figures in millions of U.S. Dollar, except per share items Jun '16 Jun '15 Jun '14 Jun '13 Jun '12 Sales 794.202 754.600 746.659 729.083 729.373 Cost of Goods Sold (COGS) incl. D&A 351.966 343.437 340.163 330.734 339.085 Gross Income 442.236 SG&A Expense EBIT (Operating Income) 353.057 89.179 411.163 406.496 398.349 345.229 336.860 337.912 390.288 340.676 65.934 69.636 60.437 49.612 Interest Expense 1.618 5.957 7.540 8.778 9.020 Other Income - Net 0.395 1.206 0.306 -1.485 0.562 Unusual Expense - Net 0.000 4.500 0.000 0.000 -0.085 Pretax Income 87.956 56.683 62.402 50.174 41.239 Income Taxes 31.319 19.541 19.471 17.696 -8.455 Net Income 56.637 37.142 42.931 32.478 49.694 EPS (recurring) 2.00 1.38 1.47 1.11 1.71 EPS (diluted) 2.00 1.27 1.47 1.11 1.71 Diluted Shares Outstanding 28.32 29.18 29.28 29.24 29.11 Total Shares Outstanding 27.75 28.41 28.93 28.91 28.84 Dividends per Share 0.62 0.50 0.40 0.36 0.30 Payout Ratio 31.00 39.37 27.21 32.43 17.54 EBITDA 108.53 85.08 87.57 78.45 68.19 EBIT 89.18 65.93 69.64 60.44 49.61 Depreciation & Amortization Expense 19.35 19.14 17.93 18.01 18.58 1. Using the data in the student spreadsheet file Ethan Allen Financials.xlsx (to find the student spreadsheets for Financial Analysis with Microsoft Excel, eighth edition, go to www.cengagebrain.com) forecast the June 30, 2017 income statement and balance sheet for Ethan Allen. Use the percent of sales method and the following assumptions: (1) sales in FY 2017 will be $797.3359; (2) the tax rate will be 35%; (3) each item that changes with sales will be the five-year average percentage of sales; (4) net fixed assets will increase to $300; and (5) the common dividend will be $0.75 per share. Use your judgment on all other items. a. What is the discretionary financing needed in 2017? Is this a surplus or deficit? b. Assume that the DFN will be absorbed by long-term debt and that the interest rate is 4% of LTD. Set up an iterative worksheet to eliminate it. Create a chart of cash versus sales and add a trend line. Is cash a consistent percentage of sales? Does this fit your expectations? d. Use the regression tool to verify your results from part c. Is the trend statistically significant? Use at least three methods from the regression output to show why or why not. e. Turn off iteration and use the Scenario Manager to set up three scenarios: 1) Best Case-Sales are 5% higher than expected. 2) Base Case-Sales are exactly as expected. 3) Worst Case-Sales are 5% less than expected. What is the DFN under each scenario? Ethan Allen Interiors Inc. Balance Sheet (Industrial) All figures in millions of U.S. Dollar, except per share items Jun '16 Jun '15 Jun '14 Jun '13 Jun '12 Assets Cash Only Total Short Term Investments Short-Term Receivables 52.659 0.000 76.182 109.176 72.601 79.721 2.198 18.153 15.529 9.005 9.467 Inventories 162.323 12.547 12.426 12.277 14.919 151.916 146.275 137.256 155.739 Other Current Assets 23.755 Total Current Assets 248.204 27.831 19.599 22.907 23.408 270.674 305.629 260.570 Property, Plant & Equipment - Gross 598.264 594.912 601.709 594.385 282.792 587.368 Accumulated Depreciation 324.649 Net Property, Plant & Equipment 317.877 313.553 302.713 291.673 273.615 277.035 288.156 291.672 295.695 Other Long-Term Assets 55.590 Total Assets 577.409 59.599 607.308 60.649 65.043 66.301 654.434 617.285 644.788 Liabilities & Shareholders' Equity ST Debt & Curr. Portion LT Debt 3.001 3.341 0.501 0.480 0.250 Accounts Payable 15.437 18.946 24.320 22.995 Other Current Liabilities 104.909 118.682 111.226 109.464 27.315 123.512 Total Current Liabilities Long-Term Debt Other Liabilities Total Liabilities 38.837 23.023 185.207 123.347 140.969 136.047 74.227 130.411 21.577 20.509 236.773 132.939 151.077 130.809 154.250 19.180 17.593 286.967 282.928 322.920 Common Stock Par/Carry Value 0.489 0.489 0.486 0.486 0.485 Additional Paid-In Capital/Capital Surplus 374.972 370.914 365.733 363.938 361.165 Retained Earnings 646.315 607.079 584.395 553.083 542.918 Treasury Stock and Other Deductions from Equity 629.574 607.947 583.147 583.150 582.700 Total Shareholders' Equity 392.202 370.535 367.467 334.357 321.868 Total Liabilities & Shareholders' Equity 577.409 607.308 654.434 617.285 644.788 Ethan Allen Interiors Inc. Income Statement (Industrial) All figures in millions of U.S. Dollar, except per share items Jun '16 Jun '15 Jun '14 Jun '13 Jun '12 Sales 794.202 754.600 746.659 729.083 729.373 Cost of Goods Sold (COGS) incl. D&A 351.966 343.437 340.163 330.734 339.085 Gross Income 442.236 SG&A Expense EBIT (Operating Income) 353.057 89.179 411.163 406.496 398.349 345.229 336.860 337.912 390.288 340.676 65.934 69.636 60.437 49.612 Interest Expense 1.618 5.957 7.540 8.778 9.020 Other Income - Net 0.395 1.206 0.306 -1.485 0.562 Unusual Expense - Net 0.000 4.500 0.000 0.000 -0.085 Pretax Income 87.956 56.683 62.402 50.174 41.239 Income Taxes 31.319 19.541 19.471 17.696 -8.455 Net Income 56.637 37.142 42.931 32.478 49.694 EPS (recurring) 2.00 1.38 1.47 1.11 1.71 EPS (diluted) 2.00 1.27 1.47 1.11 1.71 Diluted Shares Outstanding 28.32 29.18 29.28 29.24 29.11 Total Shares Outstanding 27.75 28.41 28.93 28.91 28.84 Dividends per Share 0.62 0.50 0.40 0.36 0.30 Payout Ratio 31.00 39.37 27.21 32.43 17.54 EBITDA 108.53 85.08 87.57 78.45 68.19 EBIT 89.18 65.93 69.64 60.44 49.61 Depreciation & Amortization Expense 19.35 19.14 17.93 18.01 18.58