You are given the following information regarding Oxbow Ventures, Inc.

Oxbow Ventures Balance Sheet

For the Year Ending: ($000)

Assets	12/31/x1	12/31/x2	Liab&Equity	12/31/x1	12/31/x2
Cash	$ 500	$ 200	A/C Pay.	$ 1,860	$ 2,210
A/C Rec.	6,250	7,300	Accruals	850	220
Inventory	5,180	6,470	Curr. Liab.	$ 2,710	$ 2,430
Curr. Assets	$ 11,930	$ 13,970
Fixed Assets			LT Debt	$ 11,320	$ 12,335
Gross	$ 7,500	$ 9,000	Equity	3,000	5,105
(Acc. Depr.)	(2,400)	(3,100)	Total Capital	$ 14,320	$ 17,440
Net	5,100	5,900
Total Assets	$ 17,030	$ 19,870	Tot. Liab&Eq	$ 17,030	$ 19,870

Oxbow Ventures Income Statement

For the Year Ending 20x2 ($000)

Sales	$ 22,560	100%
COGS	11,506
Gross Margin	$ 11,054
Expenses	6,032
EBIT	$ 5,022
Interest	1,180
EBT	$ 3,842
Tax	1,537
Net Income	$ 2,305

In addition, Oxbow Ventures sold $1.0 million in new stock and paid dividends of $1.2 million during the year.

a. Complete the Common-size Income Statement.

b. Construct the Statement of Cash Flows.

c. Calculate: (Use average values for ROA and ROE. All other ratios, use end of year values.)

Average Tax Rate

TIE

ACP

ROA

ROE

2. Leadley & Co is preparing a forecast for 20x3. Management expects the following next year:

+ An 8% increase in revenue.

+ Price cutting will cause the cost ratio to deteriorate by 1% (of Sales)

+ Expenses will increase, but only at 75% of the rate of increase in Sales.

+ Current Accounts will increase in proportion with Sales

+ Net Fixed Assets will increase by $5 million.

+ Interest will be at an average rate of 12% on all debt.

+ The combined tax rate will be 43%.

Using the information from the financial statements, prepare a forecast for next year.

Leadley & Co. Income Statement ($000)

	20x2	20x2	20x3	20x3
	$	% (of Sales)	$	% (of Sales)
Sales	$ 245,622
COGS	142,461
Gross Margin	$ 103,161
Expenses	49,124
EBIT	$ 54,037
Interest	9,642
EBT	$ 44,395
Tax	19,090
Net Income	$ 25,305

Leadley & Co. Balance Sheet Information ($000)

	Assets 20x2	Assets 20x3		Liab&Eq 20x2	Liab&Eq 20x3
Curr. Assets	$178,106	$	Curr.Liabilities	$ 85,700	$
Net. F. Assets	$142,234	$	LT Debt	$ 78,178	$
			Equity	$ 156,356	$
Total Assets	$320,234	$	Total Liab&Eq	$ 320,234	$

Complete the Tables above for 20x3. Work to the nearest thousand dollars.

Answer rating: 100% (QA)

1 a CommonSize IS takes sales as 100 we get a gross margin of 49 EBIT is at 2226 and EBT is 1703 The Net Income as a percentage of sales is 1022 b CFS ... View the full answer