• Do you recommend either plan 1 or plan 2 for Grace & Bell Company and why? Support you answer citing the projected outcomes from the case and the concepts that you have studied in this course.
• Address the impact of growth on future performance. Is the maximum growth possible always the best?
  • Why?
  • Support you answer citing the projected outcomes from the case and the concepts that you have studied in this course.

BALANCE SHEETS Current Plan 1 Assets Total current assets Net fixed assets Total assets 500 500 1000 300 700 1000 Liabilities and equity Acct pay & accrued liab. Note payable Total current liabilities Long-term debt Common stock Retained earnings Total liabilities and equity 100 100 200 100 500 200 1000 125 190 315 190 500 245 1250 INCOME STATEMENTS Sales EBIT Current 2000 100 Plan 1 2500 125 100 16 EBIT Interest EBT Net Income 125 16 109 65.40 50.40 Dividends (30%) Addition to Rd Earnings Free cash flow 15.12 35.28 $60 19.62 45.78 ($150) Ratios Profit margin Return on Equity Debt/Assets Times interest earned Current 0.025 0.072 0.200 6.25 Plan 1 0.026 0.088 0.380 7.81 Current 2000 100 16 84 50.40 Plan 1 2500 125 16 109 65.40 Plan 2 2800 140 79.36 60.64 36.384 15.12 35.28 $60 19.62 45.78 ($150) 10.92 25.47 ($286) Current 0.025 0.072 0.200 6.25 Plan 1 0.026 0.088 0.380 7.81 Plan 2 0.013 0.050 0.354 1.764 Industry 0.040 0.156 0.360 9.400 Current Plan 1 Plan 2 500 500 1000 300 700 1000 700 700 1400 100 100 200 100 500 200 1000 125 190 315 190 500 245 1250 140 100 280 395 500 225 1400 Current 2000 100 Plan 1 2500 125 Plan 2 2800 140