Prepare and present the economic balance sheet for Ceres Gardening Company and calculate the capital employed by the company.

Ceres exhibits

Exhibit 2 - Balance Sheet

At December 31 2002 2003 2004 2005 2006E 2007F

Assets

Cash 705 1,542 1,818 2,158 1,955

Accounts Receivable 3,485 4,405 6,821 10,286 14,471

Inventories 3,089 2,795 3,201 3,291 3,847

Current Assets 7,279 8,742 11,839 15,735 20,273 -

Plant, Property, & Equipment (net) 2,257 2,680 2,958 3,617 4,347

Other Assets 645 645 645 645 645

Land 450 1,750 2,853 2,853 2,853

Non-Current Assets 3,352 5,075 6,456 7,115 7,844 -

Total Assets 10,631 13,817 18,295 22,850 28,117 -

Liabilities & Shareholders Equity

Accounts Payable 2,034 2,973 4,899 6,660 9,424

Current Portion of Long-term Debt 315 352 525 730 649

Current Liabilities 2,349 3,325 5,423 7,390 10,074 -

Long-Term Debt 3,258 4,400 5,726 7,123 8,480

Shareholders Equity 5,024 6,091 7,146 8,336 9,563

Total Liabilities & Shareholders Equity 10,631 13,817 18,295 22,850 28,117 -

Exhibit 3 - Income Statement

For Years Ending December 31 2002 2003 2004 2005 2006E 2007F

Sales 24,652 26,797 29,289 35,088 42,597

Cost of Goods Sold 20,461 21,706 23,841 28,597 35,100

Gross Profit 4,191 5,091 5,448 6,491 7,497 -

General & Administrative Expense 1,999 2,138 2,372 2,877 3,578

Research & Development 203 203 212 222 232

Depreciation & Amortization 347 412 455 557 669

Earnings before Interest & Taxes 1,641 2,338 2,408 2,836 3,018 -

Interest 187 349 440 547 658

Earnings before Taxes 1,454 1,989 1,968 2,289 2,360 -

Taxes 264 696 689 801 826

Net Income 1,191 1,293 1,279 1,488 1,534 -

Derived Statement of Cash Flows

For Years Ending December 31 2003 2004 2005 2006E 2007F

Net Income 1,293 1,279 1,488 1,534

Depreciation & Amortization 412 455 557 669

Change in Accounts Receivable (920) (2,416) (3,465) (4,185)

Change in Inventories 294 (406) (90) (556)

Change in Accounts Payable 939 1,926 1,761 2,765

Operating Cash Flow 2,019 838 250 226 -

Investment in PP&E (835) (734) (1,215) (1,398)

Investment in Other Assets - - - -

Investment in Land (1,300) (1,103) - -

Investing Cash Flow (2,135) (1,836) (1,215) (1,398) -

Debt Issuance 1,494 1,850 2,128 2,006

Retirement of Debt (315) (352) (525) (730)

Dividends (226) (224) (298) (307)

Financing Cash Flow 953 1,274 1,306 969 -

Change in Cash 837 276 340 (203) -

Answer rating: 100% (QA)

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