Assignment: You've been asked to put together a $3-$statement model for Novele.

A couple of clarifications:

$*$ Assume that interest expense is calculated on the beginning debt balance to avoid circularity.

$*$ Assume the company maintains a minimum cash balance as in the inputs $($no more no less$)->$ equity infusion $/$ distributions becomes a plug

$*$ All input units are provided $-$ suggest expressing everthing in $\backslash$$ thousands

$*$ Assume that Depreciation is embedded somewhere in SG$\backslash$&A

Part $1$

Please put together a $3-$statement model for the business.

Model sections should include:

$1$ Income Statement

$2$ Balance Sheet

$\backslash (3\backslash$quad $\backslash )$ Cash Flow Statement

$\backslash (4\backslash$quad $\backslash )$ Working Capital Schedule

$5$ Debt and Interest Schedule

$6$ PP$\backslash$&E$/$Capex $/$ Depreciation Schedule Part $2$: Questions based on your model:

$1$ How much are revenues expected to grow? What's the years $1-5$ revenuegrowth CAGR?

$2$ What's the gross margin percentage in year $1$ vs$.$ year $5?$ When does the company become profitable on a gross margin basis?

$3$ What do you need to believe with regards to per unit profitability to invest in Novele?

$4$ When does the business become net income positive?

$5$ What about free cash flow positive?

$6$ In which years are you able to make equity distributions?

$\backslash (7\backslash$quad $\backslash )$ Are you able to make distributions in years when the business if free cash flow negative? Why and how?

$8$ Do you think the amount of debt that we're assuming is issued realistic? Why or why not?

$9$ If the business was completely equity financed $($no debt issued at all$),$ how much equity investment would the business require?

Hint: zero out debt issuance and then sum up all the equity contributions, not distributions.

$\backslash (10\backslash$quad $\backslash )$ When would equity distributions start if the business were $100\backslash \%$ equity financed $($no debt issued at all$)?$