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Assignment Chemalit

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119 views

Assignment Chemalit

Uploaded by

Vinay Jaju
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLS, PDF, TXT or read online on Scribd
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Chemalite, Inc.

(B): Cash Flow Analysis


Harvard Business School Case # 195130
Case Software #XLS-804

Copyright © 2010 President and Fellows of Harvard College. No part of this product may be
reproduced, stored in a retrieval system or transmitted in any form or by any means—electronic,
mechanical, photocopying, recording or otherwise—without the permission of Harvard Business
School.
Exhibit 1 1992 Pro-forma Financial Statements

Balance Sheet as at December 31, 2004 and 2005

December 31, 2004 December 31, 2005


(Actual) (Pro-forma)
Assets

Cash $113,000.00 $9,490.00


Accounts receivable $69,500.00 $139,530.00
Inventories-raw materials $55,000.00 $75,450.00
Inventories-finished goods $0.00 $104,680.00
Prepaid insurance $0.00 $65,000.00

Property, plant and equipment $212,500.00 $1,120,000.00


Accumulated depreciation -$10,625.00 -$56,000.00
Land $0.00 $250,000.00
Patent $100,000.00 $75,000.00

Total assets $539,375.00 $1,783,150.00

Liabilities and Owners' Equity


Taxes payable $10,900.00 $9,950.00
Short term debt $0.00 $200,000.00
Deferred income taxes $0.00 $26,730.00
Notes payable (10%) $0.00 $425,000.00
Long-term debt (10%) $0.00 $510,000.00
Dividends payable $10,000.00 $12,000.00
Common stock $500,000.00 $500,000.00
Retained earnings $18,475.00 $125,470.00
Treasury stock $0.00 -$26,000.00

Total liabilities and owners' equity $539,375.00 $1,783,150.00

Income Statement for the years ended Dec. 31,2004 and 2005

December 31, 2004 December 31, 2005


(Actual) (Pro-forma)
Sales $754,500.00 $1,886,250.00
Material -$195,000.00 -$452,700.00
Labor -$275,000.00 -$660,000.00
Rent -$50,000.00 -$25,000.00
Utilities -$30,000.00 -$82,000.00
Depreciation -$10,625.00 -$61,625.00
Gross margin $193,875.00 $604,925.00
Advertising -$22,500.00 -$70,000.00
Research and development $0.00 -$63,250.00
Insurance $0.00 -$32,500.00
Amortization of patent -$25,000.00 -$25,000.00
Selling and administration expenses -$75,000.00 -$195,750.00
Gain on sale of equipment $0.00 $24,250.00
Interest expense -$750.00 -$58,750.00
Prototypes -$23,750.00 $0.00
Legal fees -$7,500.00 $0.00
Income before taxes $39,375.00 $183,925.00
Income taxes -$10,900.00 -$64,930.00
Net income $28,475.00 $118,995.00

a
Finished goods inventory includes $5,000 of depreciation
$70,030.00
$20,450.00
$104,680.00

-$950.00

$26,730.00
$11,899.50
Cash Flow for 2005 using Indirect Method
Cash flows from operating activities
Net Income $118,995.00
Adjustments for:-
- Depreciaition $61,625.00
- Amortisation $25,000.00
- Gain on Sale of Equipment -$24,250.00
$62,375.00
Increase in Current Assets / Decrease in Current Liabilities
- Accounts Recievables -$70,030.00
- Inventories - Raw Materials -$20,450.00
- Inventories - Finished Product -$99,680.00
- Prepaid Insurance -$65,000.00
- Taxes Payable -$950.00
-$256,110.00

Increase in Current Liabilities / Decrease in Current Assets


- Deferred Income Taxes $26,730.00 $26,730.00

A. Cash Flow from Operating Activities -$48,010.00

Cash Flow from Investing Activities


Land and Building -$425,000.00
Sale of old Machinery $215,500.00
Purchase of new Machinery -$520,000.00

B.Cash Flow from Investing Activities -$729,500.00

Cash Flow from Financing Activities


Dividend paid -$10,000.00
Repurchase of shares -$26,000.00
Long term debt $510,000.00
Short term debt $200,000.00

C. Cash Flow From Financing Activities $674,000.00

D. Net Cash Flow (A+B+C) -$103,510.00


Cash at the Beginning (E) $113,000.00
Cash at the End (D+E) $9,490.00
ye hamesha subtract hota hai

ye hamesha add hota hai


Cash Flow for 2005 using Direct Method
Cash Flow From Operating Activities
Revenue From Operations 1886250
Operating Expenses
- Material -452700
- Labour -660000
- Rent -25000
- Utilities -82000
- Advertising -70000
- R&D -63250
- Insurance -97500
- Selling and Administration -195750
- Income Taxes -64930
-1711130

Cash Flow from Operating Activities 175120

Cash Flow from Investing Activities

- Purchase of Land And Building -425000


- Sold old Machinery 215500
- Purchased Machinery -520000

Cash Flow from Investing Activities -729500

Cash Flow from Financing Activities

- Dividend 2004 -10000


- Shares Purchased -26000
- Long-Term Debt 510000
- Short -term Debt 200000
- Interest Expenses -58750

Cash Flow From Financing Activities 615250

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