PreFor years ending 12/31199319941995RatioINCOME STATEMENTProfitability199319941995Net sales$16,230$20,355$23,505Return on sales4.8%4.9%5.1%Cost of sales9,43011,89813,612Return on Invested capital19.1%19.6%18.9%21.96%24.61%24.59%ROAGross profit6,8008,4579,893Return on equity23.9%24.5%23.7%Selling, general, and administrative expenses5,1956,3527,471LiquidityDepreciation160180213Current ratio2.01.92.0Net interest expense11910694Quick ratio1.31.31.4Pre-tax income1,3261,8192,115LeverageIncome taxes546822925Asset/equity2.01.91.8Net income$780$997$1,190Debt/total capital25.6%19.7%14.9%Dividends$155$200$240Interest coverage12.118.223.5BALANCE SHEETActivity ratioAssetsSales/ assets2.52.62.6Cash$508$609$706Days receivable57.255.556.7Accounts receivable2,5453,0953,652Days inventory63.156.458.7Inventories1,6301,8382,190Days payable40.340.638.6Total current assets4,6835,5426,548Gross plant & equipment3,2323,7954,163Accumulated depreciation1,3351,5151,728Net plant & equipment1,8972,2802,435Total assets$6,580$7,822$8,983LIABILITIESCurrent maturities of long-term debt$125$125$125Bank debtAccounts payable1,0421,3251,440Accrued expenses1,1451,4321,653Total current liabilities2,3122,8823,218Long-term debt1,000875750Common stock1,1351,1351,135Retained earnings2,1332,9303,880Total shareholders equity3,2684,0655,015Total liabilities$6,580$7,822$8,983

Pro formaExhibit 1 Financial Statements for Tire City, Inc.For years ending 12/31199319941995last 3 yr avergaePercent of sales199619971996INCOME STATEMENTNet sales$16,230$20,355$23,50520,03020.0%28,20633,84728206Cost of sales9,43011,89813,61211,64758.1%16,40119,68116401Gross profit6,8008,4579,89311,80514,16611805120Selling, general, and administrative expenses5,1956,3527,4716,33931.6%8,92710,7128927213000213Depreciation160180213Case2133332132400000
Pradeepta Sethi: Pradeepta Sethi:2nd page 1st para5.0%120000333000Net interest expense11910694921179299.2930335723120.8822906395Pre-tax income1,3261,8192,1152,5733,0042573Income taxes5468229251,1161,30311160.41176470590.45189664650.43735224590.4336711994Net income$780$997$1,1901,4571,7011457Dividends$155$200$24020%of PAT2913402910.200.200.20BALANCE SHEETAssetsCash$508$609$7066083%8561,027856Accounts receivable2,5453,0953,6523,09715%4,3625,2344362Inventories1,6301,8382,1901,8869%1,625
Pradeepta Sethi: Pradeepta Sethi:case3,1872656Total current assets4,6835,5426,5486,8429,4487873Gross plant & equipment3,2323,7954,163case
Pradeepta Sethi: Pradeepta Sethi:3rd line 2nd page6,1636,5636163Accumulated depreciation1,3351,5151,7281,9412,2741941Net plant & equipment1,8972,2802,4354,2224,2894222Total assets$6,580$7,822$8,98311,06413,73712095LIABILITIESCurrent maturities of long-term debt$125$125$125125125125Bank debt/ Plug3611,0431392Accounts payable1,0421,3251,4401,2696%1,7872,1441787Accrued expenses1,1451,4321,6531,4107%1,9862,3831986Total current liabilities2,3122,8823,2184,2585,6955289Long-term debt1,000875750125
Pradeepta Sethi: Pradeepta Sethi:Page 1 last para625500625Common stock1,1351,1351,1351,1351,1351135Retained earnings2,1332,9303,8805,0466,4075046Total shareholders equity3,2684,0655,0156,1817,5426181Total liabilities$6,580$7,822$8,98311,06413,73712095235050.2199619972820633847Growth rate0.052468025914Sales0.0624915264100.0725150269110.0825385274160.0925620279260.1025856284410.1126091289610.1226326294850.1326561300140.1426796305470.1527031310850.1627266316280.1727501321760.1827736327280.1927971332850.2028206338470.212844134414

PostFor years ending 12/3119961997INCOME STATEMENTRatioNet sales2820633847Profitability19961997Cost of sales1640119681Return on sales5.2%5.0%Gross profit1180514166Return on Invested capital18.9%18.0%Selling, general, and administrative expenses892710712Return on equity23.6%22.6%Depreciation213333LiquidityNet interest expense92117Current ratio1.61.7Pre-tax income25733004Quick ratio1.21.1Income taxes11161303LeverageNet income14571701Asset/equity1.81.8Dividends291340Debt/total capital10.8%7.7%BALANCE SHEETInterest coverage29.026.8AssetsActivity ratioCash8561027Sales/ assets2.52.5Accounts receivable43625234Days receivable56.456.4Inventories16253187Days inventory36.259.1Total current assets68429448Days payable39.839.8Gross plant & equipment61636563Accumulated depreciation19412274Net plant & equipment42224289Total assets1106413737LIABILITIESCurrent maturities of long-term debt125125Bank debt3611043Accounts payable17872144Accrued expenses19862383Total current liabilities42585695Long-term debt625500Common stock11351135Retained earnings50466407Total shareholders equity61817542Total liabilities1106413737