Microshots 2010

The XYZ Company
Comparative Balance Sheet - 4 Periods
Month Month Month Month

1 2 3 4
Total Current Assets $1,212,200 $1,550,530 $2,187,750 $2,826,692
Total Fixed Assets $2,900,000 $2,997,000 $3,221,800 $3,285,454
Total Assets $4,167,200 $4,604,180 $5,467,899 $6,172,246
Total Current Liabilities $936,000 $964,080 $993,002 $1,007,719
Total Liabilities $1,717,200 $1,773,680 $1,829,594 $1,872,718
Total Stockholders' Equity $2,450,000 $2,320,500 $3,638,305 $4,299,528
Total Liabilities and Equity $4,167,200 $4,094,180 $5,467,899 $6,172,246
Working Capital $276,200 $586,450 $1,194,748 $1,818,973
© Copyright, 2004, JaxWorks, All Rights Reserved.

Since 1996, JaxWorks has offered a suite of Free Excel workbooks and spreadsheets, and asso
documents, that cover a number of financial, accounting and sales functions. These are invalua
Also included Free are:

- business plan tools, including spreadsheets and excellent instructions
- Excel functions glossary and guide;
- free training courses for most Microsoft Office applications. These guides are in
PDF format and rival commercial books!
- comprehensive list of acronyms, ratios and formulas in customer financial
analysis, and financial terms;
- suite of online calculators, including, breakeven analysis, productivity analysis,
business evaluation;
- Altman Z-Score (covering publicly and privately held firms, and small
businesses);
- and payroll analysis.
If you are involved in financial analysis at any level, or want to learn more about MS Excel and o
this site is invaluable.
JaxWorks Small Business Spreadsheet Factory
Please Note: There is No Support For Free Downloads

preadsheets, and associated MS Word, PDF and HTML
ns. These are invaluable small business tools.
des are in
ncial
analysis,
about MS Excel and other applications in the Office suite
sheet Factory
or Free Downloads
MicroShots™ Business Analysis System is designed for the owner or professional to quickly analyze the
of any business. MicroShots are miniature chart snapshots of key financial analysis data. The MicroShots
fully automated and yields instant results.
Here is what you do:
1) Enter data in cells with Blue figures in the "Master Data Entry" worksheet.
2) Enter data in cells with Blue figures in the "Cash Flow Data Entry" worksheet.
3) Go to the "Quick Analysis 4 Periods" worksheet. Here you will find the Primary Financial Predictors th
determine the overall health of the business.
4) Next, go to the "Summary Analysis" worksheet. All of the key analysis worksheets feed information ba
this summary sheet for additional fast assessment.
5) Then, go to the "Financial Health Analysis" worksheet. This worksheet condenses everything into on
page.
6) Lastly, go to the automated "MicroShots" worksheet for some amazing fast analysis results.
Please Note: There is No Support For Free Downloads

stem is designed for the owner or professional to quickly analyze the overall health
iature chart snapshots of key financial analysis data. The MicroShots worksheet is
sults.
es in the "Master Data Entry" worksheet.

es in the "Cash Flow Data Entry" worksheet.
ods" worksheet. Here you will find the Primary Financial Predictors that
business.
sis" worksheet. All of the key analysis worksheets feed information back to
fast assessment.
Analysis" worksheet. This worksheet condenses everything into one printed
oShots" worksheet for some amazing fast analysis results.
Copyright, 2010, JaxWorks, All Rights Reserved.
Note: There is No Support For Free Downloads

Master Index
• Copyright • Master Data Entry • License Agreement
Financial Analysis Z-Score Analysis Special Analysis

• Asset Chart • Z-Score Analysis • Market Value Explained
• Breakdown of Costs • Z-Score Explained • Market Value Analysis
• Cash Flow Data Entry • Z-Score Analysis (1) • Return-on-investment analysis
• Cash Flow 4 Periods • Z-Score Analysis (2) • SB Headcount Analysis
• Cash Flow 8 Periods • Z-Score Analysis (3) • Corporate Headcount Analysis
• Comp. Balance Sheet • Z-Score (1) Chart
• Comp. Income Statement • Z-Score (2) Chart
• Financial Summary • Z-Score (3) Chart
• Forecast Analysis
• Logit Analysis
• MicroShots
• Payroll Analysis
• Quick Analysis 4 Periods
• Stock Valuation
• Summary Analysis

Income Statement
Month Month
Sales & Cost of Sales 1 2
Gross Sales $2,010,000 $2,560,000
Discounts/Allowances ($50,000) ($60,000)
Net Sales $1,960,000 $2,500,000
Direct Material Cost $320,000 $427,600
Direct Labor Cost $300,000 $315,000
Other Direct Costs $125,000 $128,750
Total Cost of Sales $745,000 $871,350
Gross Profit $1,215,000 $1,628,650
Expenses
Fixed Expenses 1 2
Executive Salaries $190,000 $191,000
Advertising $50,000 $51,500
Auto & Truck Expenses $30,000 $30,900
Depreciation $5,000 $5,150
Employee Benefits $3,000 $3,090
Home Office Business Expenses $1,000 $1,030
Insurance $3,906 $3,754
Bank Charges $2,133 $2,197
Legal & Professional Services $1,000 $1,330
Meals & Entertainment $4,000 $4,120
Office Expense $6,000 $6,180
Retirement Plans $1,000 $1,030
Rent - Equipment $3,000 $3,090
Rent - Office Property $8,750 $9,110
Repairs $1,000 $1,030
Supplies $1,000 $1,030
Taxes - Business & Payroll $1,000 $1,030
Travel $6,230 $6,120
Utilities $11,974 $12,374
Other Expenses $0 $0
Total Fixed Expenses $329,993 $335,065
Variable Expenses 1 2
Office salaries $90,000 $102,700
Employee benefits $43,000 $46,875
Payroll taxes $18,000 $18,540
Sales and Marketing $14,000 $14,420
Telephone and telegraph $6,000 $6,180
Stationary and office supplies $2,110 $2,680
Bad debts $100 $103
Postage $5,557 $5,724
Contributions $0 $0
Add Item $0 $0

Add Item $0 $0
Add Item $0 $0
Add Item $0 $0
Add Item $0 $0
Miscellaneous $0 $0
Total Variable Expenses $178,767 $197,222
1 2
Operating expenses $508,760 $532,287
Interest $16,250 $16,738
Amortization $1,250 $1,288
Other $0 $0
Total expenses $558,760 $583,787
Operating income $656,240 $1,044,863
Other income and expenses 1 2

Gain (loss) on sale of assets $10,000 $10,300
Other (net) $20,000 $20,600
Subtotal $30,000 $30,900
Income before tax $686,240 $1,075,763
Income taxes $205,872 $322,729
Net income $480,368 $753,034
Return On Ownership $670,368 $944,034

Break-Even $686,241 $1,075,764
686 1,076

Balance Sheet
ASSETS Month Month
Current Assets 1 2
Cash and cash equivalents $451,000 $464,530
Accounts receivable $350,000 $460,500
Notes receivable $1,200 $3,200
Inventory $400,000 $612,000
Other current assets $10,000 $10,300
Total Current Assets $1,212,200 $1,550,530
Fixed Assets 1 2
Land $1,000,000 $1,030,000
Buildings $1,500,000 $1,555,000
Equipment $800,000 $824,000
Subtotal $3,300,000 $3,409,000
Less-accumulated depreciation $400,000 $412,000
Total Fixed Assets $2,900,000 $2,997,000
Intangible Assets 1 2
Cost $50,000 $51,500
Less-accumulated amortization $20,000 $20,600
Total Intangible Assets $30,000 $30,900
Other assets $25,000 $25,750

Total Assets $4,167,200 $4,604,180
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities 1 2
Accounts payable $600,000 $618,000
Notes payable $100,000 $103,000
Current portion of long-term debt $100,000 $103,000
Income taxes $30,000 $30,900
Accrued expenses $90,000 $92,700
Other current liabilities $16,000 $16,480
Total Current Liabilities $936,000 $964,080
Non-Current Liabilities 1 2
Long-term debt $601,200 $624,200
Deferred income $100,000 $103,000
Deferred income taxes $30,000 $30,900
Other long-term liabilities $50,000 $51,500
Total Liabilities $1,717,200 $1,773,680
Stockholders' Equity 1 2
Capital stock issued $100,000 $100,000
Number of shares issued 100,000 100,000

Additional paid in capital $950,000 $678,500
Retained earnings $1,400,000 $1,542,000
Total Stockholders' Equity $2,450,000 $2,320,500
Total Liabilities and Equity $4,167,200 $4,094,180
Amount sheet is out-of-balance $0 $510,000
Summary Extractions & Additional Data Entries

Beginning of
Line Item
Year
Inventory 400,000
Total assets 3,266,000
Owners' equity 1,550,000
Number of common shares 100,000
Line Item 1 2
Current assets 1,212,200 1,550,530
Fixed assets 2,900,000 2,997,000
Total assets 4,112,200 4,547,530
Average total assets 3,689,100 3,906,765
Cash and cash equivalents 451,000 464,530
Inventory 400,000 612,000
Average inventory 400,000 506,000
Current liabilities 936,000 964,080
Total liabilities 1,717,200 1,773,680
Owners' equity 2,450,000 2,320,500
Number of common shares 100,000 100,000
Average number of common shares 100,000 100,000
Average owners' equity 2,000,000 1,935,250
Market price per share 96.52 96.52
Cash flow 90,360 289,233
Cash flow per share 0.90 2.89
Dividends paid 5,000 6,000
Retained Earnings 1,400,000 1,542,000
Total sales 2,010,000 2,560,000
Operating expenses 508,760 532,287
Operating income 1,501,240 2,027,713
Advertising expense 50,000 51,500
Marketing expense 45,000 45,000
Earnings before interest and taxes 686,240 1,075,763
Interest expense 16,250 16,738
Net income 480,368 753,034
Total loan 601,200 624,200
Value of collateral or property 65,000 65,000

Cash Flow Data Entries
Operating Data 1
Days sales in accounts receivable 30
Days materials cost in inventory 30
Days finished goods in inventory 45
Days materials cost in payables 60
Days payroll expense accrued 7
Days operating expense accrued 20
Expense Data
Direct labor $320,000
Other payroll $240,000
Payroll taxes $56,000
Insurance $28,000
Legal/accounting $40,000
Office overhead $60,000
Financing Data (0 on) Depreciation Capital

Long term debt
Short-term debt
Capital stock issued $100,000
Additional paid-in capital $50,000
Accumulated depreciation (as of 2005) $400,000
Forecasted
1 2
Sales
Sales $2,000,000 $1,500,000
Cost of sales $945,000 $865,000
Gross profit $1,055,000 $635,000
Expenses
Operating expenses $424,000 $318,000
Interest $16,250 $16,250
Amortization $1,250 $1,250
Total expenses $474,000 $369,458
Operating income $581,000 $265,542
Other income and expenses

Gain (loss) on sale of assets $100,000 $10,000
Other (net) $20,000 $50,000
Subtotal $120,000 $60,000
Income before tax $701,000 $325,542
Income taxes $210,300 $97,663
Net income $490,700 $227,879
Retained earnings-beginning $1,400,000 $1,890,700
Dividends paid $0 $0
Retained earnings-ending $1,890,700 $2,118,579
Detailed Supporting Information
Cost of sales
Direct labor $320,000 $240,000
Materials $500,000 $500,000
Other costs $125,000 $125,000
Depreciation: Enter the numbers of years.

30 year Buildings $12,500 $12,083
10 year Equipment $20,000 $21,875
Interest: Percentages from Data sheet

10.00% Long-Term $1,250 $1,250
10.00% Short-Term $15,000 $15,000
Cash Flow Balance Sheet Entries

Actual Forecast
0 1
ASSETS
Current Assets
Cash and cash equivalents $451,000 $90,360
Accounts receivable $350,000 $657,534
Inventory $400,000 $630,411
Other current assets $10,000 $60,000
Total Current Assets $1,211,000 $1,438,305
Fixed Assets
Land $100,000 $112,500
Buildings $1,500,000 $1,450,000
Equipment $800,000 $875,000

Subtotal $2,400,000 $2,437,500
Less-accumulated depreciation $400,000 $432,500
Total Fixed Assets $2,000,000 $2,005,000
Intangible Assets
Cost $50,000 $50,000
Less-accumulated amortization $20,000 $21,250
Total Intangible Assets $30,000 $28,750
Other assets $25,000 $33,000

Total Assets $3,266,000 $3,505,055
Actual Forecast
LIABILITIES AND 0 1
STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $600,000 $328,767
Notes payable $100,000 $50,000
Current portion of long-term debt $100,000 $100,000
Income taxes $30,000 $183,300
Accrued expenses $90,000 $83,288
Other current liabilities $16,000 $12,000
Total Current Liabilities $936,000 $757,355
Non-Current Liabilities
Long-term debt $600,000 $500,000
Deferred income $100,000 $90,000
Deferred income taxes $30,000 $27,000
Other long-term liabilities $50,000 $90,000
Total Liabilities $1,716,000 $1,464,355
Stockholders' Equity
Capital stock issued $100,000 $100,000
Additional paid in capital $50,000 $50,000
Retained earnings $1,400,000 $1,890,700
Other $0 $0
$1,550,000 $2,040,700
Total Liabilities and Equity $3,266,000 $3,505,055
"C" Corporation (Y/N) Y

Cash balance positive or (negative) Positive Positive
Amount sheet is out-of-balance $0 $0

Month Month
3 4
$2,721,800 $3,285,454
($70,000) ($80,000)
$2,651,800 $3,205,454
$431,238 $432,513
$330,450 $346,364
$132,613 $136,591
$894,301 $915,467
$1,757,500 $2,289,987
3 4
$195,000 $195,000
$53,045 $54,636
$31,827 $32,782
$45,305 $50,464
$3,183 $3,278
$1,061 $1,093
$4,010 $3,994
$2,263 $2,331
$1,670 $2,020
$4,244 $4,371
$6,365 $6,556
$1,061 $1,093
$3,183 $3,278
$9,544 $9,929
$1,061 $1,093
$1,061 $1,093
$1,061 $1,093
$6,010 $5,900
$14,186 $16,974
$0 $0
$385,138 $396,977
3 4
$112,368 $118,647
$47,970 $51,249
$19,096 $19,669
$14,853 $15,298
$6,365 $6,556
$3,005 $3,493
$106 $109
$5,895 $6,072
$0 $0
$0 $0

$0 $0
$0 $0
$0 $0
$0 $0
$0 $0
$209,659 $221,095
3 4
$594,797 $618,071
$17,240 $17,757
$34,479 $35,514
$1,326 $1,366
$0 $0
$647,842 $672,707
$1,109,658 $1,617,279
3 4
$10,609 $10,927
$21,218 $31,855
$31,827 $42,782
$1,141,485 $1,660,061
$342,445 $498,018
$799,039 $1,162,043
$994,039 $1,357,043
$1,141,486 $1,660,062
1,141 1,660

Month Month
3 4
$478,466 $492,820 450794.6146
$871,315 $1,382,454
$3,000 $3,400
$824,360 $937,091
$10,609 $10,927
$2,187,750 $2,826,692
3 4
$1,106,090 $1,109,273
$1,591,350 $1,739,091
$948,720 $874,182
$3,646,160 $3,722,545
$424,360 $437,091
$3,221,800 $3,285,454
3 4
$53,045 $54,636
$21,218 $21,855
$31,827 $32,782
$26,523 $27,318
$5,467,899 $6,172,246
3 4
$636,540 $640,563
$106,090 $109,273
$106,090 $109,273
$31,827 $32,782
$95,481 $98,345
$16,974 $17,484
$993,002 $1,007,719
3 4
$645,630 $668,308
$106,090 $109,273
$31,827 $32,782
$53,045 $54,636
$1,829,594 $1,872,718
3 4
$100,000 $100,000
100,000 100,000

$1,853,045 $2,469,710
$1,685,260 $1,729,818
$3,638,305 $4,299,528
$5,467,899 $6,172,246
$0 $0
3 4 Summary
2,187,750 2,826,692 $2,826,692
3,221,800 3,285,454 $3,285,454
5,409,550 6,112,146 $6,112,146
4,337,775 4,689,073 $4,689,073
478,466 492,820 $492,820
824,360 937,091 $937,091
612,180 668,545 $668,545
993,002 1,007,719 $1,007,719
1,829,594 1,872,718 $1,872,718
3,638,305 4,299,528 $4,299,528
100,000 100,000 100,000
100,000 100,000 100,000
2,594,153 2,924,764 $2,924,764
96.52 96.52 $96.52
614,196 1,267,364 $2,261,153
6.14 12.67 $22.61
7,000 8,000 $26,000
1,685,260 1,729,818 $1,729,818
2,721,800 3,285,454 $10,577,254
594,797 618,071 $2,253,915
2,127,003 2,667,383 $8,323,339
53,045 54,636 $209,181
45,000 45,000 $180,000
1,141,485 1,660,061 $4,563,549
17,240 17,757 $67,984
799,039 1,162,043 $3,194,484
645,630 668,308 $668,308
65,000 65,000 $65,000

2 3 4
30 30 30
30 30 30
45 45 45
60 60 60
7 7 7
20 20 20
$240,000 $208,000 $321,616

$180,000 $156,000 $241,212
$42,000 $36,400 $56,283
$21,000 $18,200 $28,141
$30,000 $26,000 $40,202
$45,000 $39,000 $60,303
Current Portion LT Portion Rate

$100,000 $500,000 10.00%
$50,000 10.00%
Forecasted Total
3 4 4 Periods
$1,300,000 $2,010,100 $6,810,100

$833,000 $1,071,616 $3,714,616
$467,000 $938,484 $3,095,484
$275,600 $426,141 $1,443,741

$16,250 $16,250 $65,000
$33,958 $33,958 $134,374
$1,250 $1,250 $5,000
$327,058 $477,599 $1,648,115
$139,942 $460,885 $1,447,369

$3,000 $405,700 $518,700
$100,000 $200,000 $370,000
$103,000 $605,700 $888,700
$242,942 $1,066,585 $2,336,069
$72,883 $319,975 $700,821
$170,059 $746,609 $1,635,248
$2,118,579 $2,288,638 $1,400,000
$0 $50,000 $50,000
$2,288,638 $2,985,247 $2,985,248
$208,000 $321,616 $1,089,616

$500,000 $500,000 $2,000,000
$125,000 $250,000 $625,000
$12,083 $12,083 $48,749

$21,875 $21,875 $85,625
$1,250 $1,250 $5,000

$15,000 $15,000 $60,000
Forecast
2 3 4
$289,233 $614,196 $1,267,364

$493,151 $427,397 $660,855
$590,959 $575,178 $692,852
$45,090 $76,320 $50,000
$1,418,433 $1,693,091 $2,671,071
$125,000 $137,500 $150,000

$1,450,000 $1,450,000 $1,450,000
$875,000 $875,000 $875,000

$2,450,000 $2,462,500 $2,475,000
$466,458 $500,416 $534,374
$1,983,542 $1,962,084 $1,940,626
$50,000 $50,000 $50,000

$22,500 $23,750 $25,000
$27,500 $26,250 $25,000
$120,000 $5,000 $23,000

$3,549,475 $3,686,425 $4,659,697
Forecast
2 3 4
$328,767 $328,767 $328,767

$50,000 $50,000 $50,000
$100,000 $100,000 $100,000
$70,663 $45,883 $292,975
$62,466 $54,137 $83,708
$12,000 $12,000 $12,000
$623,896 $590,787 $867,450
$500,000 $500,000 $500,000

$90,000 $90,000 $90,000
$27,000 $27,000 $27,000
$40,000 $40,000 $40,000
$1,280,896 $1,247,787 $1,524,450
$100,000 $100,000 $100,000

$50,000 $50,000 $50,000
$2,118,579 $2,288,638 $2,985,247
$0 $0 $0
$2,268,579 $2,438,638 $3,135,247
$3,549,475 $3,686,425 $4,659,697
Positive Positive Positive

$0 $0 $0

CASH FLOW DATA ENTRY
Year of Projection 2000
Corporation Type (C or S)? C 'C' Corporation format selected; income taxes WILL
Operating Data 1
Days sales in accounts receivable 30
Days materials cost in inventory 30
Days finished goods in inventory 45
Days materials cost in payables 60
Days payroll expense accrued 7
Days operating expense accrued 20
Expense Data
Direct labor as % of sales 16.00% of sales $320,000
Other payroll as % of sales 12.00% of sales $240,000
Payroll taxes as % of payroll 10.00% of payroll $56,000
Insurance as % of payroll 5.00% of payroll $28,000
Legal/accounting as % of sales 2.00% of sales $40,000
Office overhead as % of sales 3.00% of sales $60,000
Financing Data (0 on) Depreciation Capital

Long term debt
Short-term debt
Capital stock issued $100,000
Additional paid-in capital $50,000
Accumulated depreciation (as of 1999) $400,000

'C' Corporation format selected; income taxes WILL be computed
2 3 4
30 30 30
30 30 30
45 45 45
60 60 60
7 7 7
20 20 20
$240,000 $208,000 $321,616

$180,000 $156,000 $241,212
$42,000 $36,400 $56,283
$21,000 $18,200 $28,141
$30,000 $26,000 $40,202
$45,000 $39,000 $60,303
Current Portion LT Portion Rate

$100,000 $500,000 10.00%
$50,000 10.00%

The XYZ Company
6200 XYZ Drive
ABC, California 00000-0000
Phone: (000) 000-0000
FAX: (000) 000-0000
E-mail: someone@xyz.com
Financial Health MicroShots

Financial Analysis Sales Cash Flow
4 Periods 4 Periods
Financial Summary 4 Periods (1000s)
3,500 140.0
Analysis 1 2 3 4 3,000 120.0
Net Sales 1,960 2,500 2,652 3,205 2,500 100.0
Cost of Goods Sold 745 871 894 915 2,000 80.0
1,500 60.0
Gross Profit (Margin) 1,215 1,629 1,757 2,290 1,000 40.0
G&A 179 197 210 221 500 20.0
Total Operating Expenses 559 584 648 673 0 0.0
1 2 3 4 1 2 3 4
EBIT* 686 1,076 1,141 1,660 Thousands of $ Thousands of $
Net Income After 480 753 799 1,162
Ownership** 670 944 994 1,357 Net Income Debt Ratio
Current Assets 1,212 1,551 2,188 2,827
4 Periods 4 Periods
Inventory 400 612 824 937
1,400 0.5
Other Assets 10 10 11 11 1,200 0.4
Total Assets 4,167 4,604 5,468 6,172 1,000
800 0.3
Current Liabilities 936 964 993 1,008
600 0.2
Non-current Liabilities 781 810 837 865
400
Total Liabilities 1,717 1,774 1,830 1,873 0.1
200
Equity 2,450 2,321 3,638 4,300 0 0.0
Net Cash Flow 90 289 614 1,267 1 2 3 4 1 2 3 4
Thousands of $ Ratio
Current Ratio 1.30 1.61 2.20 2.81
Quick Ratio 0.87 0.97 1.37 1.88 Current Ratio Break-Even
Debt Ratio 0.41 0.39 0.33 0.30 4 Periods 4 Periods
Asset Turnover 0.47 0.54 0.48 0.52
Net Income/Sales 0.25 0.30 0.30 0.36 3.0 2,000
2.5
Debt/Equity 0.70 0.76 0.50 0.44 1,500
2.0
Return on Assets 0.15 0.24 0.18 0.23
1.5 1,000
Working Capital 276 586 1,195 1,819 1.0
Sales/Working Capital 7.10 4.26 2.22 1.76 500
0.5
Book Market Value 2,450 2,831 3,638 4,300 0.0 0
Plus Ownership** 3,120 3,775 4,632 5,657 Ratio
1 2 3 4 1
Thousands of2 $ 3 4

CASH FLOW STATEMENT 4 PERIODS
Forecasted
1 2
Cash from operations
Net earnings (loss) $490,700 $227,879
Add-depreciation and amortization $33,750 $35,208
Net cash $524,450 $263,087
Cash provided (used) by

operating activities
Accounts Receivable ($307,534) $164,383
Inventory ($230,411) $39,452
Other current assets ($50,000) $14,910
Other non-current assets ($8,000) ($87,000)
Accounts payable ($271,233) $0
Current portion of long-term debt $0 $0
Income taxes $153,300 ($112,637)
Accrued expenses ($6,712) ($20,822)
Other current liabilities ($4,000) $0
Dividends paid $0 $0
Net cash from operations ($724,590) ($1,714)
Investment transactions
Increases (decreases)
Land $12,500 $12,500
Buildings and improvements ($50,000) $0
Equipment $75,000 $0
Intangible assets $0 $0
Net cash from investments $37,500 $12,500
Financing transactions
Short term notes payable ($50,000) $0
Long term debt ($100,000) $0
Deferred income ($10,000) $0
Deferred income taxes ($3,000) $0
Other long-term liabilities $40,000 ($50,000)
Capital stock and paid in capital $0 $0
Net cash from financing ($123,000) ($50,000)
Net increase (decrease) in cash ($360,640) $198,873

Cash at beginning of period $451,000 $90,360
Cash at the end of period $90,360 $289,233

Forecasted Total
3 4 4 Periods
$170,059 $746,609 $1,635,248

$35,208 $35,208 $139,374
$205,267 $781,817 $1,774,621
$65,754 ($233,458) ($310,855)

$15,781 ($117,674) ($292,852)
($31,230) $26,320 ($40,000)
$115,000 ($18,000) $2,000
$0 $0 ($271,233)
$0 $0 $0
($24,780) $247,092 $262,975
($8,329) $29,571 ($6,292)
$0 $0 ($4,000)
$0 ($50,000) ($50,000)
$132,196 ($116,149) ($710,257)
$12,500 $12,500 $50,000

$0 $0 ($50,000)
$0 $0 $75,000
$0 $0 $0
$12,500 $12,500 $75,000
$0 $0 ($50,000)
$0 $0 ($100,000)
$0 $0 ($10,000)
$0 $0 ($3,000)
$0 $0 ($10,000)
$0 $0 $0
$0 $0 ($173,000)
$324,963 $653,168 $816,364

$289,233 $614,196 $451,000
$614,196 $1,267,364 $1,267,364

CASH FLOW PROJECTIONS 8 PERIODS
Current
1 2 3
Cash from operations 1 2 3
Net earnings (loss) $490,700 $227,879 $170,059
Add-depreciation and amortization $33,750 $35,208 $35,208
Net cash from operations $524,450 $263,087 $205,267

Accounts Receivable ($307,534) $164,383 $65,754
Inventory ($230,411) $39,452 $15,781
Other current assets ($50,000) $14,910 ($31,230)
Other non-current assets ($8,000) ($87,000) $115,000
Accounts payable ($271,233) $0 $0
Current portion of long-term debt $0 $0 $0
Income taxes $153,300 ($112,637) ($24,780)
Accrued expenses ($6,712) ($20,822) ($8,329)
Other current liabilities ($4,000) $0 $0
Dividends paid $0 $0 $0
Net cash from operations ($724,590) ($1,714) $132,196
Land $12,500 $12,500 $12,500
Buildings and improvements ($50,000) $0 $0
Equipment $75,000 $0 $0
Intangible assets $0 $0 $0
Net cash from investments $37,500 $12,500 $12,500
Short term notes payable ($50,000) $0 $0
Long term debt ($100,000) $0 $0
Deferred income ($10,000) $0 $0
Deferred income taxes ($3,000) $0 $0
Other long-term liabilities $40,000 ($50,000) $0
Capital stock and paid in capital $0 $0 $0
Net cash from financing ($123,000) ($50,000) $0
Net increase (decrease) in cash ($360,640) $198,873 $324,963

Cash at beginning of period $451,000 $90,360 $289,233
Cash at the end of period $90,360 $289,233 $614,196

Current Forecasted-Linear Regression Analysis
4 5 6 7 8
4 5 6 7 8
$746,609 $586,289 $657,279 $728,270 $799,261
$35,208 $35,937 $36,374 $36,812 $37,249
$781,817 $622,226 $693,654 $765,082 $836,510
($233,458) ($46,814) ($34,454) ($22,094) ($9,734)

($117,674) $5,422 $36,876 $68,330 $99,784
$26,320 $35,705 $53,987 $72,269 $90,551
($18,000) $43,500 $60,700 $77,900 $95,100
$0 $135,617 $216,986 $298,356 $379,726
$0 $0 $0 $0 $0
$247,092 $158,052 $194,975 $231,899 $268,822
$29,571 $28,763 $40,897 $53,031 $65,165
$0 $2,000 $3,200 $4,400 $5,600
($50,000) ($50,000) ($65,000) ($80,000) ($95,000)
($116,149) $312,244 $508,167 $704,091 $900,014
$12,500 $12,500 $12,500 $12,500 $12,500

$0 $25,000 $40,000 $55,000 $70,000
$0 ($37,500) ($60,000) ($82,500) ($105,000)
$0 $0 $0 $0 $0
$12,500 $0 ($7,500) ($15,000) ($22,500)
$0 $25,000 $40,000 $55,000 $70,000

$0 $50,000 $80,000 $110,000 $140,000
$0 $5,000 $8,000 $11,000 $14,000
$0 $1,500 $2,400 $3,300 $4,200
$0 ($20,000) ($27,000) ($34,000) ($41,000)
$0 $0 $0 $0 $0
$0 $61,500 $103,400 $145,300 $187,200
$653,168 $995,970 $1,312,721 $1,629,472 $1,946,224

$614,196 $533,313 $602,159 $671,005 $739,851
$1,267,364 $1,529,282 $1,914,880 $2,300,477 $2,686,075

Primary Financial Predictors - 4 Periods - Quick Anal
Account Period
Descriptions 1
Accounts Receivable-Beginning 350,000
Accounts Receivable-Ending 657,534
Cash 451,000
Cash Flow 90,360
Current Assets Current Liabilities
Current Assets 1,212,200
Current Liabilities 936,000
EBIT 686,240
Equity 2,450,000
Fixed Assets 2,900,000
Interest 16,250
Inventory-Beginning 400,000
Inventory-Ending 630,411
EBIT Sales
Long Term Debt 601,200
Market Value of Equity 2,450,000
Marketable Securities 10,000
Net Profit before Interest and Taxes 656,240
Retained Earnings 1,400,000
Sales 1,960,000
Tangible Total Assets 3,300,000
Total Assets 4,167,200
Cash Flow Working Capital
Total Liabilities 1,717,200
Working Capital 276,200


Predictions
Z Score: If Publicly Held 1
1.2 x (working capital / total assets) 0.0795
1.4 x (retained earn / total assets) 0.4703
3.3 x (EBIT / total assets) 0.5434
.6 x (market value equity / total liabilities) 0.8560
.999 x (sales / total assets) 0.4699
Z-Score 2.42
Z Score: If Privately Held 1

.717 x (working capital / total assets) 0.0475
.847 x (retained earn / total assets) 0.2846
.042 x (market value equity / total liabilities) 0.0599
.998 x (sales / total assets) 0.4694
Z-Score 1.37
Z Score: Non-Manufacturing 1
6.56 x (working capital / total assets) 0.4348
3.26 x (retained earn / total assets) 1.0952
1.05 x (market value equity / total liabilities) 1.4981
Z Score 4.13
Springate Analysis 1
Working Capital 276,200
Net Profit before interest and Taxes 656,240
Net Profit before Taxes 686,240
Sales 1,960,000
Working Capital/Total Assets 0.06628

Net Profit before interest and Taxes/Total Ass 0.16468
Net Profit before Taxes/Current Liabilities 0.73316
Sales/Total Assets 0.47034
Z= 1.25

Logit Analysis 1
Cash 451,000
Marketable Securities 10,000
Accounts Receivable-Beginning 350,000
Accounts Receivable-Ending 657,534
Inventory-Beginning 400,000
Inventory-Ending 630,411
Fixed Assets 2,900,000
Long Term Debt 601,200
Sales 1,960,000
Income from Continuing Operations 656,240
Constant 0.23883
Average Inventories/Sales -0.035
Average Receivables/Average Inventories -1.651
Cash+Marketable Securities/Total Assets -1.193
Quick Assets/Current Liabilities 3.673
Income from CO/(Total Assets-Current Liab) 0.099
Long-Term Debt/(Total Assets-Current Liab) -0.809
Sales/(Net Working Capital+Fixed Assets) 0.058
Sum of Coefficients * Ratios 0.381
Probability of Bankruptcy 40.58%
1
Fulmer H-Factor Analysis 1
Retained Earnings/Total Assets 0.3360
Sales/Total Assets 0.4703
EBIT/Equity 0.2801
Cash Flow/Total Debt 0.0526
Total Debt/Total Assets 0.4121
Current Liabilities/Total Assets 0.2246
Log Tangible Total Assets 6.5185
Working Capital/Total Debt 0.1608
Log EBIT/Interest 1.6256
H-Factor
1.86
0.10
0.02
0.07
-0.05
0.52
3.75
0.17
1.45
Sum 7.89

Less -6.08
H= 1.82

riods - Quick Analysis
Period Period Period Predictor
ID Instructions
2 3 4
657,534 460,500 493,151 L
460,500 493,151 427,397 L These figures are linked to
464,530 478,466 492,820 L the Master Data Entry
663,403 803,429 1,145,988 F worksheet.
1,550,530 2,187,750 2,826,692 Z, S
The Predictor ID Codes
964,080 993,002 1,007,719 All
indicate the individual
1,075,763 1,141,485 1,660,061 Z, S, F
analyses that use the
2,320,500 3,638,305 4,299,528 F
numbers:
2,997,000 3,221,800 3,285,454 L
16,738 17,240 17,757 F Z = Z-Scores
630,411 590,959 575,178 L S = Springate
590,959 575,178 692,852 L L = Logit Analysis
624,200 645,630 668,308 L F = Fulmer H-Factor
2,320,500 3,638,305 4,299,528 Z All = All Predictors
10,300 10,609 10,927 L
1,044,863 1,109,658 1,617,279 S, L
1,542,000 1,685,260 1,729,818 Z, F
2,500,000 2,651,800 3,205,454 ALL except Z3
3,409,000 3,646,160 3,722,545 F
4,604,180 5,467,899 6,172,246 All
1,773,680 1,829,594 1,872,718 Z, F
586,450 1,194,748 1,818,973 Z, S, F

All = All Predictors

Predictions
2 3 4 TREND
0.1528 0.2622 0.3536
0.4689 0.4315 0.3924
0.7710 0.6889 0.8876
0.7850 1.1932 1.3775
0.5424 0.4845 0.5188
2.72 3.06 3.53 3.85 OK
Overall Trend OK
2 3 4 TREND
0.0913 0.1567 0.2113
0.2837 0.2611 0.2374
0.7259 0.6486 0.8356
0.0549 0.0835 0.0964
0.5419 0.4840 0.5183
1.70 1.63 1.90 2.03 Warning - Trend Below 2.90
Overall Trend is OK
2 3 4 TREND
0.8356 1.4334 1.9332
1.0918 1.0048 0.9136
1.5701 1.4029 1.8074
1.3737 2.0880 2.4107
4.87 5.93 7.06 7.96 OK
Overall Trend is OK
2 3 4 TREND
586,450 1,194,748 1,818,973
1,044,863 1,109,658 1,617,279
4,604,180 5,467,899 6,172,246
1,075,763 1,141,485 1,660,061
964,080 993,002 1,007,719
2,500,000 2,651,800 3,205,454
0.12737 0.21850 0.29470

0.23365 0.20876 0.26896
1.11584 1.14953 1.64734
0.54298 0.48498 0.51933
1.80 1.82 2.42 2.71 OK - Above 0.862
Overall Trend is OK

2 3 4 TREND
464,530 478,466 492,820
10,300 10,609 10,927
657,534 460,500 493,151
460,500 493,151 427,397
630,411 590,959 575,178
590,959 575,178 692,852
2,997,000 3,221,800 3,285,454
4,604,180 5,467,899 6,172,246
964,080 993,002 1,007,719
624,200 645,630 668,308
2,500,000 2,651,800 3,205,454
1,044,863 1,109,658 1,617,279
0.23883 0.23883 0.23883

-0.026 -0.023 -0.023
-1.234 -1.357 -0.976
-1.112 -0.964 -0.880
2.982 3.041 2.840
0.140 0.121 0.152
-0.746 -0.628 -0.563
0.077 0.077 0.090
0.321 0.505 0.879
42.04% 37.65% 29.33% 28% OK - Below 50%
2 3 4 5 Overall Trend is OK
2 3 4 TREND
0.3349 0.3082 0.2803
0.5430 0.4850 0.5193
0.4636 0.3137 0.3861
0.3740 0.4391 0.6119
0.3852 0.3346 0.3034
0.2094 0.1816 0.1633
6.5326 6.5618 6.5708
0.3306 0.6530 0.9713
1.8080 1.8209 1.9708
1.85 1.70 1.55

0.12 0.10 0.11
0.03 0.02 0.03
0.48 0.56 0.78
-0.05 -0.04 -0.04
0.49 0.42 0.38
3.76 3.77 3.78
0.36 0.71 1.05
1.62 1.63 1.76
8.65 8.88 9.40

-6.08 -6.08 -6.08
2.57 2.80 3.33 3.82 OK
2.63 Overall Trend is OK

Summary Analysis
The XYZ Company
Month Month
FINANCIAL INDICATORS 1 2
1 2
Z Score: If Publicly Held 2.40 2.70
(Higher is Better) If Z is less than 1.8 then the firm is classified as Fail
Z Score: If Privately Held 1.35 1.68

(Higher is Better) If Z is less than 1.23 then the firm is classified as Fa
Z Score: Non-manufacturing 4.09 4.83

(Higher is Better) If Z is less than 1.11 then the firm is classified as Fa
Logit Analysis 58.42% 41.04%

(Lower is Better) If percentage is higher than 50% and trending highe
Income Ratios
Turnover of Total Operating Assets 158% 159%
Net Sales to Net Worth 80.99% 109.19%
Gross Margin on Net Sales 61.99% 65.15%
Operating Income to Net Sales Ratio 33.48% 41.79%
Profitability Ratios
Earnings Per Share (EPS) Ratio $4.80 $7.53
Net Profit Margin 24.51% 30.12%
Return on Total Assets 11.53% 16.36%
Return on Net Worth 19.61% 26.60%

Summary Analysis
The XYZ Company
Liquidity Ratios
Acid Test (Quick Ratio) 0.87 0.97
Current Ratio 1.30 1.61
Activity Ratios
Average Collection Period Computations

Accounts Receivable $350,000 $460,500
Credit Sales $2,010,000 $2,560,000
Days Per Year 365 365
Credit sales per day $5,507 $7,014
Average Collection Period - Days 63.56 65.66
Average Collection Period Ratio 5.74 5.56
Inventory Turnover 1.86 1.42
Days Sales in AR 65.18 67.23
Receivables Turnover 5.60 5.43
Days Inventory 195.97 256.36
Debt ratio 0.41 0.39
Other Key Ratios
Net Sales to Inventory 4.90 4.08
Days Purchases in AP 293.96 258.87

Summary Analysis
The XYZ Company
Working Capital $276,200 $586,450
Net Sales to Working Capital 7.10 4.26
Total Assets to Net Sales 2.13 1.84
Net Sales to AR 5.60 5.43
Net Sales to Net Fixed Assets 0.68 0.83
Net Sales to Total Assets 0.47 0.54
Amortization and Depreciation Expense to Net Sales 0.02 0.01
Gross Profit Percentage 61.99% 65.15%
Operating Expenses as % of Net Sales 28.51% 23.35%
Return on Net Sales 24.51% 30.12%
Income before tax to Net Worth 28.01% 38.01%
Income before tax to Total Assets 16.47% 23.36%
Retained Earning to Net Income 291.44% 204.77%
Times Interest Earned 40.38 62.43
Interest Expense to Net Sales 0.01 0.01
Current Liabilities to Net Worth 0.38 0.34
Current Liabilities to Inventory 2.34 1.58
AP to Net Sales 0.31 0.25
Total Liabilities to Net Worth (Debt Ratio) 70.09% 62.66%
Net Worth to Total Liabilities 1.43 1.60

Summary Analysis
The XYZ Company
PAYROLL ANALYSIS
CURRENT NUMBER OF EMPLOYEES 37

CURRENT SALES ANNUALIZED $3,399,968
CURRENT COMPLETED PERIOD SALES $3,285,454
CURRENT PAYROLL $350,064
QUARTER/YEAR PAYROLL ONE YEAR AGO $313,647
SALES VOLUME REQUIRED, AT CURRENT PAYROLL LEVEL, TO PRODUCE PROFITS

EQUAL TO THE PREVIOUS YEAR PROFITS . . . . . . . . . . . . . . . . . . . $3,666,922
SALES DEFICIENCY = SALES REQUIRED MINUS CURRENT VOLUME
SALES DEFICIENCY IS--------------- ($266,954)
GROSS PAYROLL ALLOWABLE

UNDER PROJECTED CONDITIONS . . . . . . . . . . . . . . . . . . . $324,579
GROSS PAYROLL BURDEN IS------ ($25,485)
THE NUMBER OF NEEDED EMPLOYEES ON THE PAYROLL . . . . . . . . . . . . . . . . . . . . . . . . . . .

Summary Analysis
The XYZ Company
CASH FLOW ANALYSIS
Month Month
Cash from operations 1 2
Net earnings (loss) $480,368 $753,034

Add-depreciation and amortization $33,750 $34,763
Net cash from operations $514,118 $787,797

Accounts Receivable ($307,534) $164,383
Inventory ($230,411) $39,452
Other current assets ($50,000) $14,910
Other non-current assets ($8,000) ($87,000)
Accounts payable ($271,233) $0
Current portion of long-term debt $0 $0
Income taxes $153,300 ($112,637)
Accrued expenses ($6,712) ($20,822)
Other current liabilities ($4,000) $0
Distributions to shareholders $0 $0
Net cash used by operations ($724,590) ($1,714)
Land $12,500 $12,500
Buildings and improvements ($50,000) $0
Equipment $75,000 $0
Intangible assets $0 $0
Net cash from investments $37,500 $12,500
Short term notes payable ($50,000) $0
Long term debt ($100,000) $0
Deferred income ($10,000) $0
Deferred income taxes ($3,000) $0
Other long-term liabilities $40,000 ($50,000)
Capital invested $0 $0

Summary Analysis
The XYZ Company
Net cash from financing ($123,000) ($50,000)
Net increase (decrease) in cash ($360,640) $198,873
Cash at beginning of period $451,000 $464,530
Cash at the end of period $90,360 $663,403
Prepared by JaxWorks Consultancy, Inc.

ummary Analysis
The XYZ Company
Month Month Trend
3 4 5 Comments
3 4 5
3.04 3.51 3.83 Trend is Upward
Z is less than 1.8 then the firm is classified as Failed.


20.78% 8.28% -10.54% Trend is Downward

percentage is higher than 50% and trending higher-Not Good!
120% 112% 93% Trend is Downward
73.53% 75.13% 71.39% Trend is Downward
66.28% 71.44% 73.58% Trend is Upward
41.85% 50.45% 54.64% Trend is Upward
$7.99 $11.62 $13.21 Trend is Upward
30.13% 36.25% 39.06% Trend is Upward
14.61% 18.83% 20.37% Trend is Upward
21.96% 27.03% 28.20% Trend is Upward

ummary Analysis
The XYZ Company
$871,315 $1,382,454
$2,721,800 $3,285,454
365 365
$7,457 $9,001
116.85 153.58
3.12 2.38 1.07 Trend is Downward
119.93 157.42 184.79 Trend is Upward
336.45 373.62 443.86 Trend is Upward

ummary Analysis
The XYZ Company
$1,194,748 $1,818,973 $2,278,247 Trend is Upward
2.22 1.76 (0.68) Trend is Downward
66.28% 71.44% 73.58% Trend is Upward
30.13% 36.25% 39.06% Trend is Upward
31.37% 38.61% 40.29% Trend is Upward
20.88% 26.90% 29.10% Trend is Upward
64.37 91.08 103.07 Trend is Upward

ummary Analysis
The XYZ Company
-8.1%
Comments
-3.01 Under-staffed

ummary Analysis
The XYZ Company
Month Month Trend

3 4 5 Comments
$799,039 $1,162,043 $1,321,378 Trend is Upward

$35,805 $36,880 $37,907 Trend is Upward
$834,845 $1,198,922 $1,359,286 Trend is Upward
$65,754 ($233,458) ($46,814) Trend is Upward

$15,781 ($117,674) $5,422 Trend is Upward
($31,230) $26,320 $35,705 Trend is Upward
$115,000 ($18,000) $43,500 Trend is Downward
$0 $0 $135,617 Trend is Upward
$0 $0 $0 Trend is Upward
($24,780) $247,092 $158,052 Trend is Upward
($8,329) $29,571 $28,763 Trend is Upward
$0 ($50,000) ($50,000) Trend is Downward
$132,196 ($116,149) $312,244 Trend is Upward
$12,500 $12,500 $12,500 Trend is Upward

$0 $0 ($37,500) Trend is Downward
$12,500 $12,500 $0 Trend is Downward

$0 $0 ($20,000) Trend is Downward

ummary Analysis
The XYZ Company
$324,963 $653,168 $995,970 Trend is Upward
$478,466 $492,820 $506,553 Trend is Upward
$803,429 $1,145,988 $1,502,523 Trend is Upward
repared by JaxWorks Consultancy, Inc.

Forecast Analysis- 12 Fiscal Periods
Income Statement
Month Month Month

1 2 3
Gross Sales $2,010,000 $2,560,000 $2,721,800
Discounts/Allowances ($50,000) ($60,000) ($70,000)
Net Sales $1,960,000 $2,500,000 $2,651,800
Direct Material Cost $320,000 $427,600 $431,238
Direct Labor Cost $300,000 $315,000 $330,450
Other Direct Costs $125,000 $128,750 $132,613
Total Cost of Sales $745,000 $871,350 $894,301
Gross Profit $1,215,000 $1,628,650 $1,757,500
Expenses
Fixed Expenses 1 2 3
Executive Salaries $190,000 $191,000 $195,000
Advertising $50,000 $51,500 $53,045
Auto & Truck Expenses $30,000 $30,900 $31,827
Depreciation $5,000 $5,150 $45,305
Employee Benefits $3,000 $3,090 $3,183
Home Office Business Expenses $1,000 $1,030 $1,061
Insurance $3,906 $3,754 $4,010
Bank Charges $2,133 $2,197 $2,263
Legal & Professional Services $1,000 $1,330 $1,670
Meals & Entertainment $4,000 $4,120 $4,244
Office Expense $6,000 $6,180 $6,365
Retirement Plans $1,000 $1,030 $1,061
Rent - Equipment $3,000 $3,090 $3,183
Rent - Office Property $8,750 $9,110 $9,544
Repairs $1,000 $1,030 $1,061
Supplies $1,000 $1,030 $1,061
Taxes - Business & Payroll $1,000 $1,030 $1,061
Travel $6,230 $6,120 $6,010
Utilities $11,974 $12,374 $14,186
Other Expenses $0 $0 $0
Total Fixed Expenses $329,993 $335,065 $385,138

Variable Expenses 1 2 3
Office salaries $90,000 $102,700 $112,368
Employee benefits $43,000 $46,875 $47,970
Payroll taxes $18,000 $18,540 $19,096
Sales and Marketing $14,000 $14,420 $14,853
Telephone and telegraph $6,000 $6,180 $6,365
Stationary and office supplies $2,110 $2,680 $3,005
Bad debts $100 $103 $106
Postage $5,557 $5,724 $5,895
Contributions $0 $0 $0
Add Item $0 $0 $0
Add Item $0 $0 $0
Add Item $0 $0 $0
Add Item $0 $0 $0
Add Item $0 $0 $0
Miscellaneous $0 $0 $0
Total Variable Expenses $178,767 $197,222 $209,659
1 2 3
Operating expenses $508,760 $532,287 $594,797
Interest $16,250 $16,738 $17,240
Depreciation $32,500 $33,475 $34,479
Amortization $1,250 $1,288 $1,326
Other $0 $0 $0
Total expenses $558,760 $583,787 $647,842
Operating income $656,240 $1,044,863 $1,109,658
Other income and expenses 1 2 3

Gain (loss) on sale of assets $10,000 $10,300 $10,609
Other (net) $20,000 $20,600 $21,218
Subtotal $30,000 $30,900 $31,827
1 2 3
Income before tax $686,240 $1,075,763 $1,141,485
Income taxes $205,872 $322,729 $342,445
Net income $480,368 $753,034 $799,039
Return On Ownership $670,368 $944,034 $994,039

Balance Sheet
ASSETS Month Month Month
Current Assets 1 2 3
Cash and cash equivalents $451,000 $464,530 $478,466
Accounts receivable $350,000 $460,500 $871,315
Notes receivable $1,200 $3,200 $3,000
Inventory $400,000 $612,000 $824,360
Other current assets $10,000 $10,300 $10,609
Total Current Assets $1,212,200 $1,550,530 $2,187,750
Fixed Assets 1 2 3
Land $1,000,000 $1,030,000 $1,106,090
Buildings $1,500,000 $1,555,000 $1,591,350
Equipment $800,000 $824,000 $948,720
Subtotal $3,300,000 $3,409,000 $3,646,160
Less-accumulated depreciation $400,000 $412,000 $424,360
Total Fixed Assets $2,900,000 $2,997,000 $3,221,800
Intangible Assets 1 2 3
Cost $50,000 $51,500 $53,045
Less-accumulated amortization $20,000 $20,600 $21,218
Total Intangible Assets $30,000 $30,900 $31,827
Other assets $25,000 $25,750 $26,523

Total Assets $4,167,200 $4,604,180 $5,467,899

Balance Sheet
Current Liabilities 1 2 3
Accounts payable $600,000 $618,000 $636,540
Notes payable $100,000 $103,000 $106,090
Current portion of long-term debt $100,000 $103,000 $106,090
Income taxes $30,000 $30,900 $31,827
Accrued expenses $90,000 $92,700 $95,481
Other current liabilities $16,000 $16,480 $16,974
Total Current Liabilities $936,000 $964,080 $993,002
Non-Current Liabilities 1 2 3
Long-term debt $601,200 $624,200 $645,630
Deferred income $100,000 $103,000 $106,090
Deferred income taxes $30,000 $30,900 $31,827
Other long-term liabilities $50,000 $51,500 $53,045
Sub-total $781,200 $809,600 $836,592
Total Liabilities $1,717,200 $1,773,680 $1,829,594
Stockholders' Equity 1 2 3
Capital stock issued $100,000 $100,000 $100,000
Additional paid in capital $950,000 $678,500 $1,853,045
Retained earnings $1,400,000 $1,542,000 $1,685,260
Total Stockholders' Equity $2,450,000 $2,320,500 $3,638,305
Total Liabilities and Equity $4,167,200 $4,094,180 $5,467,899
Altman Z-Score Analysis 1 2 3

Publicly Held Firm 2.40 2.70 3.04
Privately Held Firm 1.35 1.68 1.62
Service, Retail, Wholesale 4.09 4.83 5.89
Prepared by

There are instances where 4 financial periods are not enough. This worksheet allows you to post additiona
12. You will be overwriting forecast formulas, so, be sure you save a backup copy for recovery.
Use this worksheet with the Financial Summary sheet to flag problem areas that are magified over time.
Month Month Month Month Month Month Month

4 5 6 7 8 9 10
$3,285,454 $3,641,354 $4,040,170 $4,438,986 $4,837,803 $5,236,619 $5,635,435
($80,000) ($90,000) ($100,000) ($110,000) ($120,000) ($130,000) ($140,000)
$3,205,454 $3,551,354 $3,940,170 $4,328,986 $4,717,803 $5,106,619 $5,495,435
$432,513 $488,132 $522,250 $556,367 $590,485 $624,603 $658,721
$346,364 $361,589 $377,043 $392,497 $407,951 $423,405 $438,859
$136,591 $140,397 $144,261 $148,124 $151,988 $155,851 $159,715
$915,467 $990,118 $1,043,553 $1,096,988 $1,150,423 $1,203,859 $1,257,294
$2,289,987 $2,561,236 $2,896,617 $3,231,998 $3,567,379 $3,902,760 $4,238,141
4 5 6 7 8 9 10
$195,000 $197,500 $199,400 $201,300 $203,200 $205,100 $207,000
$54,636 $56,159 $57,704 $59,250 $60,795 $62,340 $63,886
$32,782 $33,695 $34,623 $35,550 $36,477 $37,404 $38,332
$50,464 $70,616 $88,270 $105,925 $123,580 $141,234 $158,889
$3,278 $3,370 $3,462 $3,555 $3,648 $3,740 $3,833
$1,093 $1,123 $1,154 $1,185 $1,216 $1,247 $1,278
$3,994 $4,046 $4,098 $4,150 $4,202 $4,254 $4,306
$2,331 $2,396 $2,462 $2,528 $2,594 $2,659 $2,725
$2,020 $2,355 $2,695 $3,035 $3,375 $3,715 $4,055
$4,371 $4,493 $4,616 $4,740 $4,864 $4,987 $5,111
$6,556 $6,739 $6,925 $7,110 $7,295 $7,481 $7,666
$1,093 $1,123 $1,154 $1,185 $1,216 $1,247 $1,278
$3,278 $3,370 $3,462 $3,555 $3,648 $3,740 $3,833
$9,929 $10,326 $10,723 $11,120 $11,517 $11,914 $12,311
$1,093 $1,123 $1,154 $1,185 $1,216 $1,247 $1,278
$1,093 $1,123 $1,154 $1,185 $1,216 $1,247 $1,278
$1,093 $1,123 $1,154 $1,185 $1,216 $1,247 $1,278
$5,900 $5,790 $5,680 $5,570 $5,460 $5,350 $5,240
$16,974 $18,080 $19,761 $21,442 $23,124 $24,805 $26,486
$0 $0 $0 $0 $0 $0 $0
$396,977 $424,549 $449,651 $474,754 $499,856 $524,959 $550,061

4 5 6 7 8 9 10
$118,647 $129,831 $139,392 $148,953 $158,514 $168,075 $177,636
$51,249 $53,734 $56,318 $58,902 $61,487 $64,071 $66,655
$19,669 $20,217 $20,774 $21,330 $21,886 $22,443 $22,999
$15,298 $15,724 $16,157 $16,590 $17,023 $17,455 $17,888
$6,556 $6,739 $6,925 $7,110 $7,295 $7,481 $7,666
$3,493 $3,941 $4,388 $4,836 $5,283 $5,731 $6,178
$109 $112 $115 $118 $122 $125 $128
$6,072 $6,241 $6,413 $6,585 $6,757 $6,929 $7,100
$0 $0 $0 $0 $0 $0 $0
$0 $0 $0 $0 $0 $0 $0
$0 $0 $0 $0 $0 $0 $0
$0 $0 $0 $0 $0 $0 $0
$0 $0 $0 $0 $0 $0 $0
$0 $0 $0 $0 $0 $0 $0
$0 $0 $0 $0 $0 $0 $0
$221,095 $236,540 $250,482 $264,424 $278,366 $292,308 $306,250
4 5 6 7 8 9 10
$618,071 $661,089 $700,134 $739,178 $778,222 $817,267 $856,311
$17,757 $18,252 $18,754 $19,256 $19,758 $20,261 $20,763
$35,514 $36,503 $37,508 $38,512 $39,517 $40,521 $41,526
$1,366 $1,404 $1,443 $1,481 $1,520 $1,559 $1,597
$0 $0 $0 $0 $0 $0 $0
$672,707 $717,248 $757,838 $798,428 $839,018 $879,607 $920,197
$1,617,279 $1,843,988 $2,138,779 $2,433,570 $2,728,362 $3,023,153 $3,317,944
4 5 6 7 8 9 10
$10,927 $11,232 $11,541 $11,850 $12,159 $12,468 $12,777
$31,855 $32,464 $36,082 $39,700 $43,318 $46,936 $50,554
$42,782 $43,695 $47,623 $51,550 $55,477 $59,404 $63,332
4 5 6 7 8 9 10
$1,660,061 $1,887,683 $2,186,402 $2,485,120 $2,783,839 $3,082,557 $3,381,276
$498,018 $566,305 $655,921 $745,536 $835,152 $924,767 $1,014,383
$1,162,043 $1,321,378 $1,530,481 $1,739,584 $1,948,687 $2,157,790 $2,366,893
$1,357,043 $1,518,878 $1,729,881 $1,940,884 $2,151,887 $2,362,890 $2,573,893

Month Month Month Month Month Month Month
4 5 6 7 8 9 10
$492,820 $506,553 $520,492 $534,432 $548,371 $562,311 $576,251
$1,382,454 $1,643,112 $1,993,930 $2,344,748 $2,695,565 $3,046,383 $3,397,201
$3,400 $4,300 $4,940 $5,580 $6,220 $6,860 $7,500
$937,091 $1,149,271 $1,331,634 $1,513,997 $1,696,361 $1,878,724 $2,061,087
$10,927 $11,232 $11,541 $11,850 $12,159 $12,468 $12,777
$2,826,692 $3,314,467 $3,862,537 $4,410,607 $4,958,676 $5,506,746 $6,054,816
4 5 6 7 8 9 10
$1,109,273 $1,162,318 $1,202,709 $1,243,099 $1,283,490 $1,323,881 $1,364,272
$1,739,091 $1,784,766 $1,860,128 $1,935,490 $2,010,852 $2,086,214 $2,161,576
$874,182 $948,542 $983,268 $1,017,995 $1,052,721 $1,087,448 $1,122,174
$3,722,545 $3,895,625 $4,046,104 $4,196,584 $4,347,063 $4,497,543 $4,648,022
$437,091 $449,271 $461,634 $473,997 $486,361 $498,724 $511,087
$3,285,454 $3,446,354 $3,584,470 $3,722,586 $3,860,703 $3,998,819 $4,136,935
4 5 6 7 8 9 10
$54,636 $56,159 $57,704 $59,250 $60,795 $62,340 $63,886
$21,855 $22,464 $23,082 $23,700 $24,318 $24,936 $25,554
$32,782 $33,695 $34,623 $35,550 $36,477 $37,404 $38,332
$27,318 $28,079 $28,852 $29,625 $30,398 $31,170 $31,943

$6,172,246 $6,822,596 $7,510,481 $8,198,367 $8,886,253 $9,574,138 $10,262,024

4 5 6 7 8 9 10
$640,563 $658,833 $672,856 $686,879 $700,902 $714,925 $728,948
$109,273 $112,318 $115,409 $118,499 $121,590 $124,681 $127,772
$109,273 $112,318 $115,454 $118,568 $121,659 $124,784 $127,886
$32,782 $33,695 $34,636 $35,570 $36,498 $37,435 $38,366
$98,345 $101,086 $103,868 $106,649 $109,431 $112,213 $114,995
$17,484 $17,971 $18,465 $18,960 $19,454 $19,949 $20,443
$1,007,719 $1,036,220 $1,060,628 $1,085,037 $1,109,445 $1,133,853 $1,158,261
4 5 6 7 8 9 10
$668,308 $690,523 $712,799 $735,074 $757,350 $779,625 $801,901
$109,273 $112,318 $115,409 $118,499 $121,590 $124,681 $127,772
$32,782 $33,695 $34,623 $35,550 $36,477 $37,404 $38,332
$54,636 $56,159 $57,704 $59,250 $60,795 $62,340 $63,886
$864,999 $892,695 $920,534 $948,373 $976,212 $1,004,051 $1,031,890
$1,872,718 $1,928,916 $1,981,162 $2,033,409 $2,085,656 $2,137,903 $2,190,150
4 5 6 7 8 9 10
$100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
$2,469,710 $2,921,233 $3,494,600 $4,067,968 $4,641,335 $5,214,703 $5,788,070
$1,729,818 $1,872,448 $1,985,719 $2,098,990 $2,212,262 $2,325,533 $2,438,805
$4,299,528 $4,893,680 $5,580,319 $6,266,958 $6,953,597 $7,640,236 $8,326,875
$6,172,246 $6,822,596 $7,561,481 $8,300,367 $9,039,253 $9,778,138 $10,517,024
4 5 6 7 8 9 10
3.51 3.83 4.20 4.57 4.93 5.30 5.67
1.88 2.01 2.16 2.31 2.47 2.62 2.77
7.02 7.92 8.91 9.89 10.88 11.86 12.85

riods are not enough. This worksheet allows you to post additional periods up to
las, so, be sure you save a backup copy for recovery.
mmary sheet to flag problem areas that are magified over time.
Month Month
11 12
$6,034,251 $6,433,067
($150,000) ($160,000)
$5,884,251 $6,273,067
$692,838 $726,956
$454,313 $469,767
$163,578 $167,442
$1,310,729 $1,364,164
$4,573,522 $4,908,903
11 12
$208,900 $210,800
$65,431 $66,977
$39,259 $40,186
$176,543 $194,198
$3,926 $4,019
$1,309 $1,340
$4,358 $4,410
$2,791 $2,857
$4,395 $4,735
$5,235 $5,358
$7,852 $8,037
$1,309 $1,340
$3,926 $4,019
$12,708 $13,105
$1,309 $1,340
$1,309 $1,340
$1,309 $1,340
$5,130 $5,020
$28,167 $29,848
$0 $0
$575,163 $600,266

11 12
$187,196 $196,757
$69,239 $71,823
$23,555 $24,112
$18,321 $18,753
$7,852 $8,037
$6,626 $7,073
$131 $134
$7,272 $7,444
$0 $0
$0 $0
$0 $0
$0 $0
$0 $0
$0 $0
$0 $0
$320,192 $334,134
11 12
$895,355 $934,400
$21,265 $21,767
$42,530 $43,535
$1,636 $1,674
$0 $0
$960,787 $1,001,376
$3,612,735 $3,907,526
11 12
$13,086 $13,395
$54,173 $57,791
$67,259 $71,186
11 12
$3,679,994 $3,978,712
$1,103,998 $1,193,614
$2,575,996 $2,785,099
$2,784,896 $2,995,899

Month Month
11 12
$590,190 $604,130
$3,748,019 $4,098,837
$8,140 $8,780
$2,243,450 $2,425,813
$13,086 $13,395
$6,602,886 $7,150,955
11 12
$1,404,663 $1,445,053
$2,236,938 $2,312,301
$1,156,900 $1,191,627
$4,798,501 $4,948,981
$523,450 $535,813
$4,275,051 $4,413,167
11 12
$65,431 $66,977
$26,173 $26,791
$39,259 $40,186
$32,716 $33,488
$10,949,910 $11,637,795

11 12
$742,970 $756,993
$130,863 $133,953
$130,994 $134,090
$39,298 $40,227
$117,776 $120,558
$20,938 $21,433
$1,182,669 $1,207,077
11 12
$824,176 $846,451
$130,863 $133,953
$39,259 $40,186
$65,431 $66,977
$1,059,729 $1,087,567
$2,242,397 $2,294,644
11 12
$100,000 $100,000
$6,361,438 $6,934,805
$2,552,076 $2,665,347
$9,013,513 $9,700,152
$11,255,910 $11,994,795
11 12
6.04 6.40
2.92 3.07
13.84 14.82

Financial Summary Analysis
*EBIT is Earnings Before Interest and Taxes
**Ownership is the Total Reward for being the owner=Owner Salary + Bonus + Net Income + Other

1 2 3 4
Income Statement
Net Sales $1,960,000 $2,500,000 $2,651,800 $3,205,454
Cost of Goods Sold $745,000 $871,350 $894,301 $915,467
Gross Profit (Margin) $1,215,000 $1,628,650 $1,757,500 $2,289,987
G&A $178,767 $197,222 $209,659 $221,095
Total Operating Expenses $558,760 $583,787 $647,842 $672,707
EBIT* $686,240 $1,075,763 $1,141,485 $1,660,061
Net Income After $480,368 $753,034 $799,039 $1,162,043
Ownership** $670,368 $944,034 $994,039 $1,357,043
Balance Sheet
Current Assets $1,212,200 $1,550,530 $2,187,750 $2,826,692
Inventory $400,000 $612,000 $824,360 $937,091
Other Assets $10,000 $10,300 $10,609 $10,927
Total Assets $4,167,200 $4,604,180 $5,467,899 $6,172,246
Current Liabilities $936,000 $964,080 $993,002 $1,007,719
Non-current Liabilities $781,200 $809,600 $836,592 $864,999
Total Liabilities $1,717,200 $1,773,680 $1,829,594 $1,872,718
Equity $2,450,000 $2,320,500 $3,638,305 $4,299,528
Cash Flow
Net Cash Flow $90,360 $289,233 $614,196 $1,267,364
Key Ratios
Current Ratio 1.30 1.61 2.20 2.81
Quick Ratio 0.87 0.97 1.37 1.88
Debt Ratio 0.41 0.39 0.33 0.30
Asset Turnover 0.47 0.54 0.48 0.52
Net Income/Sales 0.25 0.30 0.30 0.36
Debt/Equity 0.70 0.76 0.50 0.44
Return on Assets 0.15 0.24 0.18 0.23
Working Capital $276,200 $586,450 $1,194,748 $1,818,973
Sales/Working Capital 7.10 4.26 2.22 1.76
Market Value
Book Market Value $2,450,000 $2,830,500 $3,638,305 $4,299,528
Plus Ownership** $3,120,368 $3,774,534 $4,632,344 $5,656,570
Altman Z-Score Analysis
Publicly Held Firm 2.40 2.70 3.04 3.51
Privately Held Firm 1.35 1.68 1.62 1.88
Non-Manufacturing 4.09 4.83 5.89 7.02
*EBIT is Earnings Before Interest and Taxes

**Ownership is the Total Reward for being the owner=Owner Salary + Bonus + Net Income + Other

Income Statement
Smoothing Forecast - 8 Periods
1 2 3 4 5 6 7 8
1 2
Net Sales Cost of Goods Sold Gross Profit (Margin) Current Assets
G&A Total Operating Expenses EBIT* Total Assets
Net Income After Ownership** Total Liabilities

ancial Summary Analysis
Month Month Month Month Trend

5 6 7 8 ASSESSMENT
Forecast
$3,641,354 $4,040,170 $4,438,986 $4,837,803 Upward
$990,118 $1,043,553 $1,096,988 $1,150,423 Upward
$2,651,236 $2,996,617 $3,341,998 $3,687,379 Upward
$236,540 $250,482 $264,424 $278,366 Upward
$717,248 $757,838 $798,428 $839,018 Upward
$1,887,683 $2,186,402 $2,485,120 $2,783,839 Upward
$1,321,378 $1,530,481 $1,739,584 $1,948,687 Upward
$1,518,878 $1,729,881 $1,940,884 $2,151,887 Upward
Forecast
$3,314,467 $3,862,537 $4,410,607 $4,958,676 Upward
$1,149,271 $1,331,634 $1,513,997 $1,696,361 Upward
$11,232 $11,541 $11,850 $12,159 Upward
$6,822,596 $7,510,481 $8,198,367 $8,886,253 Upward
$1,036,220 $1,060,628 $1,085,037 $1,109,445 Upward
$892,695 $920,534 $948,373 $976,212 Upward
$1,928,916 $1,981,162 $2,033,409 $2,085,656 Upward
$4,893,680 $5,580,319 $6,266,958 $6,953,597 Upward
Forecast
$1,529,282 $1,914,880 $2,300,477 $2,686,075 Upward
Forecast
3.20 3.64 4.06 4.47 Upward
2.09 2.39 2.67 2.94 Upward
0.28 0.26 0.25 0.23 Downward
0.53 0.54 0.54 0.54 Upward
0.36 0.38 0.39 0.40 Upward
0.39 0.36 0.32 0.30 Downward
0.23 0.24 0.24 0.25 Upward
$2,278,247 $2,801,909 $3,325,570 $3,849,232 Upward
1.60 1.44 1.33 1.26 Downward
Forecast
$4,893,680 $5,529,319 $6,164,957 $6,800,596 Upward
$6,412,558 $7,259,200 $8,105,842 $8,952,483 Upward
Forecast
3.83 4.20 4.57 4.93 Upward
2.01 2.16 2.31 2.47 Upward
7.92 8.91 9.89 10.88 Upward

Balance Sheet
Smoothing Forcast - 8 Periods
1 2 3 4 5 6 7 8
Current Assets Inventory Other Assets

Total Assets Current Liabilities Non-current Liabilities
Total Liabilities Equity
pared by JaxWorks Consultancy, Inc.

The XYZ Company
6200 XYZ Drive
Phone: (000) 000-0000
FAX: (000) 000-0000
November 10, 2020
Comparative Income Statement - 4 Periods
Sales Revenue Cost of Sales Gross Profit Fixed Expenses Other Expenses Income Before Tax Income Taxes
Month Month Month

1 2 3
Income Details $ % $ % $
Gross Sales $2,010,000 102.55% $2,560,000 102.40% $2,721,800
Discounts/Allowances ($50,000) -2.55% ($60,000) -2.40% ($70,000)
Net Sales $1,960,000 100.00% $2,500,000 100.00% $2,651,800
Direct Material Cost $320,000 16.33% $427,600 17.10% $431,238
Direct Labor Cost $300,000 15.31% $315,000 12.60% $330,450
Other Direct Costs $125,000 6.38% $128,750 5.15% $132,613
Total Cost of Sales $745,000 38.01% $871,350 34.85% $894,301
Gross Profit $1,215,000 61.99% $1,628,650 65.15% $1,757,500
Expenses
Fixed Expenses
Executive Salaries $190,000 9.69% $191,000 7.64% $195,000
Advertising $50,000 2.55% $51,500 2.06% $53,045
Auto & Truck Expenses $30,000 1.53% $30,900 1.24% $31,827
Depreciation $5,000 0.26% $5,150 0.21% $45,305
Employee Benefits $3,000 0.15% $3,090 0.12% $3,183
Home Office Business Expenses $1,000 0.05% $1,030 0.04% $1,061
Insurance $3,906 0.20% $3,754 0.15% $4,010
Bank Charges $2,133 0.11% $2,197 0.09% $2,263
Legal & Professional Services $1,000 0.05% $1,330 0.05% $1,670
Meals & Entertainment $4,000 0.20% $4,120 0.16% $4,244
Office Expense $6,000 0.31% $6,180 0.25% $6,365
Retirement Plans $1,000 0.05% $1,030 0.04% $1,061
Rent - Equipment $3,000 0.15% $3,090 0.12% $3,183

Month Month Month

1 2 3
Rent - Office Property $8,750 0.45% $9,110 0.36% $9,544
Repairs $1,000 0.05% $1,030 0.04% $1,061
Supplies $1,000 0.05% $1,030 0.04% $1,061
Taxes - Business & Payroll $1,000 0.05% $1,030 0.04% $1,061
Travel $6,230 0.32% $6,120 0.24% $6,010
Utilities $11,974 0.61% $12,374 0.49% $14,186
Other Expenses $0 0.00% $0 0.00% $0
Total Fixed Expenses $329,993 16.84% $335,065 13.40% $385,138

Month Month Month

1 2 3
Variable Expenses
Office salaries $90,000 4.59% $102,700 4.11% $112,368
Employee benefits $43,000 2.19% $46,875 1.88% $47,970
Payroll taxes $18,000 0.92% $18,540 0.74% $19,096
Sales and Marketing $14,000 0.71% $14,420 0.58% $14,853
Telephone and telegraph $6,000 0.31% $6,180 0.25% $6,365
Stationary and office supplies $2,110 0.11% $2,680 0.11% $3,005
Bad debts $100 0.01% $103 0.00% $106
Postage $5,557 0.28% $5,724 0.23% $5,895
Contributions $0 0.00% $0 0.00% $0
Add Item $0 0.00% $0 0.00% $0
Add Item $0 0.00% $0 0.00% $0
Add Item $0 0.00% $0 0.00% $0
Add Item $0 0.00% $0 0.00% $0
Add Item $0 0.00% $0 0.00% $0
Total Variable Expenses $178,767 9.12% $197,222 7.89% $209,659
Operating expenses $508,760 25.96% $532,287 21.29% $594,797

Interest $16,250 0.83% $16,738 0.67% $17,240
Depreciation $32,500 1.66% $33,475 1.34% $34,479
Amortization $1,250 0.06% $1,288 0.05% $1,326
Other $0 0.00% $0 0.00% $0
Total expenses $558,760 28.51% $583,787 23.35% $647,842
Operating income $656,240 33.48% $1,044,863 41.79% $1,109,658
Other income and expenses

Gain (loss) on sale of assets $10,000 0.51% $10,300 0.41% $10,609
Other (net) $20,000 1.02% $20,600 0.82% $21,218
Subtotal $30,000 1.53% $30,900 1.24% $31,827
Income before tax $686,240 35.01% $1,075,763 43.03% $1,141,485

Month Month Month

1 2 3
Income taxes $205,872 10.50% $322,729 12.91% $342,445
Net income $480,368 24.51% $753,034 30.12% $799,039
Return On Ownership $670,368 34.20% $944,034 37.76% $994,039

November 10, 2020
Expenses Other Expenses Income Before Tax Income Taxes Net Income (Loss)
Month Month
3 4
% $ %
102.64% $3,285,454 100.00%
-2.64% ($80,000) -2.43%
100.00% $3,205,454 97.57%
16.26% $432,513 13.49%
12.46% $346,364 10.81%
5.00% $136,591 4.26%
33.72% $915,467 28.56%
66.28% $2,289,987 71.44%
7.35% $195,000 6.08%

2.00% $54,636 1.70%
1.20% $32,782 1.02%
1.71% $50,464 1.57%
0.12% $3,278 0.10%
0.04% $1,093 0.03%
0.15% $3,994 0.12%
0.09% $2,331 0.07%
0.06% $2,020 0.06%
0.16% $4,371 0.14%
0.24% $6,556 0.20%
0.04% $1,093 0.03%
0.12% $3,278 0.10%

Month Month
3 4
0.36% $9,929 0.31%
0.04% $1,093 0.03%
0.04% $1,093 0.03%
0.04% $1,093 0.03%
0.23% $5,900 0.18%
0.53% $16,974 0.53%
0.00% $0 0.00%
14.52% $396,977 12.38%

Month Month
3 4
4.24% $118,647 3.70%

1.81% $51,249 1.60%
0.72% $19,669 0.61%
0.56% $15,298 0.48%
0.24% $6,556 0.20%
0.11% $3,493 0.11%
0.00% $109 0.00%
0.22% $6,072 0.19%
0.00% $0 0.00%
0.00% $0 0.00%
0.00% $0 0.00%
0.00% $0 0.00%
0.00% $0 0.00%
0.00% $0 0.00%
7.91% $221,095 6.90%
22.43% $618,071 19.28%

0.65% $17,757 0.55%
1.30% $35,514 1.11%
0.05% $1,366 0.04%
0.00% $0 0.00%
24.43% $672,707 20.99%
41.85% $1,617,279 50.45%
0.40% $10,927 0.34%

0.80% $31,855 0.99%
1.20% $42,782 1.33%
43.05% $1,660,061 51.79%

Month Month
3 4
12.91% $498,018 15.54%
30.13% $1,162,043 36.25%
37.49% $1,357,043 42.34%

The XYZ Company
6200 XYZ Drive
Phone: (000) 000-0000
FAX: (000) 000-0000
November 10, 2020
Total Current Assets Total Fixed Assets Total Assets Total Current Liabilities Total Liabilities Total Stockholders' Equity To
Month Month Month

1 2 3
ASSETS $ % $ % $
Current Assets
Cash and cash equivalents $451,000 10.82% $464,530 10.09% $478,466
Accounts receivable $350,000 8.40% $460,500 10.00% $871,315
Notes receivable $1,200 0.03% $3,200 0.07% $3,000
Inventory $400,000 9.60% $612,000 13.29% $824,360
Other current assets $10,000 0.24% $10,300 0.22% $10,609
Total Current Assets $1,212,200 29.09% $1,550,530 33.68% $2,187,750
Fixed Assets
Land $1,000,000 24.00% $1,030,000 22.37% $1,106,090
Buildings $1,500,000 36.00% $1,555,000 33.77% $1,591,350
Equipment $800,000 19.20% $824,000 17.90% $948,720
Subtotal $3,300,000 79.19% $3,409,000 74.04% $3,646,160
Less-accumulated depreciation $400,000 9.60% $412,000 8.95% $424,360
Total Fixed Assets $2,900,000 69.59% $2,997,000 65.09% $3,221,800
Intangible Assets
Cost $50,000 1.20% $51,500 1.12% $53,045
Less-accumulated amortization $20,000 0.48% $20,600 0.45% $21,218
Total Intangible Assets $30,000 0.72% $30,900 0.67% $31,827
Other assets $25,000 0.60% $25,750 0.56% $26,523
Total All Other Assets $55,000 1.32% $56,650 1.36% $58,350
Total Assets $4,167,200 100.00% $4,604,180 100.00% $5,467,899

Total Current Assets Total Fixed Assets Total Assets Total Current Liabilities Total Liabilities Total Stockholders' Equity To
Month Month Month

1 2 3
Current Liabilities
Accounts payable $600,000 14.40% $618,000 15.09% $636,540
Notes payable $100,000 2.40% $103,000 2.52% $106,090
Current portion of long-term debt $100,000 2.40% $103,000 2.52% $106,090
Income taxes $30,000 0.72% $30,900 0.75% $31,827
Accrued expenses $90,000 2.16% $92,700 2.26% $95,481
Other current liabilities $16,000 0.38% $16,480 0.40% $16,974
Total Current Liabilities $936,000 22.46% $964,080 23.55% $993,002
Non-Current Liabilities
Long-term debt $601,200 14.43% $624,200 15.25% $645,630
Deferred income $100,000 2.40% $103,000 2.52% $106,090
Deferred income taxes $30,000 0.72% $30,900 0.75% $31,827
Other long-term liabilities $50,000 1.20% $51,500 1.26% $53,045
Total Liabilities $1,717,200 41.21% $1,773,680 43.32% $1,829,594
Stockholders' Equity
Capital stock issued $100,000 2.40% $100,000 2.44% $100,000
Number of shares issued $100,000 2.40% $100,000 2.44% $100,000
Additional paid in capital $950,000 22.80% $678,500 16.57% $1,853,045
Retained earnings $1,400,000 33.60% $1,542,000 37.66% $1,685,260
Total Stockholders' Equity $2,450,000 58.79% $2,320,500 56.68% $3,638,305
Total Liabilities and Equity $4,167,200 100.00% $4,094,180 100.00% $5,467,899

November 10, 2020
Current Liabilities Total Liabilities Total Stockholders' Equity Total Liabilities and Equity
Month Month
3 4
% $ %
8.75% $492,820 7.98%

15.94% $1,382,454 22.40%
0.05% $3,400 0.06%
15.08% $937,091 15.18%
0.19% $10,927 0.18%
40.01% $2,826,692 45.80%
20.23% $1,109,273 17.97%

29.10% $1,739,091 28.18%
17.35% $874,182 14.16%
66.68% $3,722,545 60.31%
7.76% $437,091 7.08%
58.92% $3,285,454 53.23%
0.97% $54,636 0.89%

0.39% $21,855 0.35%
0.58% $32,782 0.53%
0.49% $27,318 0.44%
1.40% $60,100 1.44%
100.00% $6,172,246 100.00%

Current Liabilities Total Liabilities Total Stockholders' Equity Total Liabilities and Equity
Month Month
3 4
11.64% $640,563 10.38%

1.94% $109,273 1.77%
1.94% $109,273 1.77%
0.58% $32,782 0.53%
1.75% $98,345 1.59%
0.31% $17,484 0.28%
18.16% $1,007,719 16.33%
11.81% $668,308 10.83%

1.94% $109,273 1.77%
0.58% $32,782 0.53%
0.97% $54,636 0.89%
33.46% $1,872,718 30.34%
1.83% $100,000 1.62%

1.83% $100,000 1.62%
33.89% $2,469,710 40.01%
30.82% $1,729,818 28.03%
66.54% $4,299,528 69.66%
100.00% $6,172,246 100.00%
ared by JaxWorks Consultancy, Inc.

The Prediction of Corporate Failure
Logit Analysis: The Model
Chistine Zavgren
Bankruptcy prediction models are more generally known as measures of financial distress. The best-known, and mos
used, multiple discriminant analysis method is the one proposed by Edward Altman, Professor of Finance at the Stern Sc
Business, New York University, The Z-Score Analysis or Zeta Model. Despite the positive results of his study, Altman’s mode
key weakness: it assumed variables in the sample data to be normally distributed. "If all variables are not normally distribu
methods employed may result in selection of an inappropriate set of predictors". Chistine Zavgren developed a mod
corrected for this problem. Her model used logit analysis to predict bankruptcy. Due to its use of logit analysis, her m
considered "more robust". Further, logit analysis actually provides a probability (in terms of a percentage) of bankruptcy. A
probability calculated might be considered a measure of the effectiveness of management, i.e. effective management will n
a company to the verge of bankruptcy.
Application of the logit model requires four steps. First, a series of seven financial ratios are calculated. Second, each
multiplied by a coefficient unique to that ratio. This coefficient can be either positive or negative. Third, the resulting valu
summed together (y). Finally, the probability of bankruptcy for a firm is calculated as the inverse of (1 + ey) where "e" is the
natural logarithms."Explanatory variables with a negative coefficient increase the probability of bankruptcy because they red
toward zero, with the result that the bankruptcy probability function approaches 1/1, or 100 percent. Likewise, indep
variables with a positive coefficient decrease the probability of bankruptcy".
Logit Analysis developed by Christine Zavgren-Bankruptcy Predictor

Zavgren, C. 1983, The Prediction of Corporate Failure: The State of the Art, Journal of Accounting Literature

The Prediction of Corporate Failure
Logit Analysis: The Model
Chistine Zavgren
1 2 3 4
Cash $451,000 $464,530 $478,466 $492,820
Marketable Securities $10,000 $10,300 $10,609 $10,927
Accounts Receivable $350,000 $460,500 $871,315 $1,382,454
Inventory $400,000 $612,000 $824,360 $937,091
Fixed Assets $2,900,000 $2,997,000 $3,221,800 $3,285,454
Total Assets $4,167,200 $4,604,180 $5,467,899 $6,172,246
Current Liabilities $936,000 $964,080 $993,002 $1,007,719
Long Term Debt $601,200 $624,200 $645,630 $668,308
Sales $1,960,000 $2,500,000 $2,651,800 $3,205,454
Income from Continuing Operations $656,240 $1,044,863 $1,109,658 $1,617,279
Logit Analysis
1 2 3 4
Constant 0.23883 0.23883 0.23883 0.23883
Inventories/Sales -0.022 -0.026 -0.034 -0.032
Receivables/Inventory -1.385 -1.191 -1.673 -2.335
Cash+Marketable Securities/Total Assets -1.193 -1.112 -0.964 -0.880
Quick Assets/Current Liabilities 2.663 2.982 4.211 5.754
Income from CO/(Total Assets-Current Liab) 0.099 0.140 0.121 0.152
Long-Term Debt/(Total Assets-Current Liab) -0.809 -0.746 -0.628 -0.563
Sales/(Net Working Capital+Fixed Assets) 0.068 0.077 0.066 0.069
Sum of Coefficients * Ratios -0.340 0.362 1.338 2.404
Probability of Bankruptcy 58.42% 41.04% 20.78% 8.28%

iction of Corporate Failure
ogit Analysis: The Model
Chistine Zavgren
y known as measures of financial distress. The best-known, and most-widely

e one proposed by Edward Altman, Professor of Finance at the Stern School of
sis or Zeta Model. Despite the positive results of his study, Altman’s model had a
e data to be normally distributed. "If all variables are not normally distributed, the
n inappropriate set of predictors". Chistine Zavgren developed a model that
analysis to predict bankruptcy. Due to its use of logit analysis, her model is
actually provides a probability (in terms of a percentage) of bankruptcy. Also, the
sure of the effectiveness of management, i.e. effective management will not lead
. First, a series of seven financial ratios are calculated. Second, each ratio is
is coefficient can be either positive or negative. Third, the resulting values are
nkruptcy for a firm is calculated as the inverse of (1 + ey) where "e" is the base of
egative coefficient increase the probability of bankruptcy because they reduce ey
y probability function approaches 1/1, or 100 percent. Likewise, independent
robability of bankruptcy".
lure: The State of the Art, Journal of Accounting Literature

iction of Corporate Failure
ogit Analysis: The Model
Chistine Zavgren
ared by JaxWorks Consultancy, Inc.

Market Value Analysis
Overview
The XYZ Company
Determining the Value of a Business

Perhaps the most difficult stage in a buyout is determining an acceptable price for the business. Business valuation is pa
and partly a science. Computing the value of the company's tangible assets usually poses no major problem, but assigni
to the intangibles such as goodwill, almost always creates controversy. The seller expects goodwill to reflect the hard
long hours invested in building the business. The buyer, however, is willing to pay extra only for those intangible a
produce exceptional income. So, how can the buyer and the seller arrive at a fair price? There are few universa
establishing the value of a business, but both parties should observe the following guidelines.
There is no single best method for determining a business's worth since each business sale is unique.
The wisest approach is to compute a company’s value using several techniques and then choose the one that makes
sense.
The deal must be financially feasible for both parties. The seller must be satisfied with the price received for the
Frequently, the entrepreneur feels like he is selling his baby. So, he does not want to leave a dime on the table. But,
cannot pay an excessively high price that would require heavy borrowing and would strain cash flows from the outset.
The buyer and the seller should have access to business records.
Valuations should be based on facts, not fiction.
No surprise is the best surprise. Both parties should deal with one another honestly and in good faith.
The primary reason buyers purchase existing businesses is to get their future earning potential. The second most comm
is to get an established asset base. It is much easier to buy assets than to build them. Evaluation methods should t
characteristics into consideration. However, too many business sellers and buyers depend on rules of thumb that i
unique features of small companies. For example, cable TV franchises are valued at 11 times cash flow; advertising ag
75 percent of gross income; day care centers at $500 to $1,000 per child enrolled; motels at $12,300 to $14,600 per r
garbage pickup routes at two and one half times gross income. The problem is that such one size fits-all approaches sel
well because no two businesses are alike.
The best rule of thumb to use in valuing businesses is "Don't use rules of thumb to value businesses.” If you rely on th
too much, you can be led astray. On average, businesses sell for one third less than the accepted industry rule of thumb
There are three techniques and several variations for determining the value of a business:
1 The balance sheet technique.
2 The earnings approach.
3 The market (or price/earnings) approach .
Balance Sheet Technique.

The balance sheet technique is one of the most commonly used methods of evaluating a business, although it is
recommended because it oversimplifies the valuation process. This method computes the company's net worth or owne
(net worth = assets - liabilities) and uses this figure as the value. The problem with this technique is that it fails to recogn
Most small businesses have market values that exceed their reported book values.
The first step is to determine which assets are included in the sale. In most cases, the owner has some personal asset
not want to sell. Remember that net worth on a financial statement will likely differ significantly from actual net worth in th

Overview
The XYZ Company
Variation: Adjusted Balance Sheet Technique. A more realistic method for determining a company's value is to adjus
value of net worth to reflect actual market value. The values reported on a company’s books may overstate or understat
value of assets and liabilities. Typical assets in a business sale include notes and accounts receivable, inventories, sup
fixtures. If a buyer purchases notes and accounts receivable, he should estimate the likelihood of their collection and a
value accordingly.
In manufacturing, wholesale, and retail businesses, inventory usually is the largest single asset involved in the sale.
physical inventory count is the best way to determine accurately the quantity of goods to be transferred. The sale ma
three types of inventory, each having its own method of valuation: raw materials, work in-process, and finished goods. T
and the seller must arrive at a method for evaluating the inventory First-in-first-out (FIFO), last-in-first out (LIFO), and
costing are three frequently used techniques, but the most common methods use the cost of last purchase and the rep
value of the inventory. Before accepting any inventory value, the buyer should evaluate the condition of the goods.
One young couple purchased a lumber yard without examining the inventory completely. After completing the s
discovered that most of the lumber in a warehouse they had neglected to inspect was warped and was of little value a
material. The bargain price they paid for the business turned out not to be the good deal they had expected. To a
problems, some buyers insist on having a knowledgeable representative on an inventory team that counts the inve
checks its condition. Nearly every sale involves merchandise that cannot be sold; but, by taking this precaution, a buyer
the chance of being stuck with worthless inventory.
Fixed assets transferred in a sale might include land, buildings, equipment, and fixtures. Business owners frequently
estate and buildings at prices well below their actual market value. Equipment and fixtures, depending on their con
usefulness, may increase or decrease the true value of the business. Appraisals of these assets on insurance policies a
guidelines for establishing market value.
Business evaluations based on balance sheet method suffer one major drawback: they do not consider the futur
potential of the business. These techniques value assets at current prices and do not consider them as tools for creat
profits. The next method for computing the value of a business is based on its expected future earnings.
Earnings Approach.
The buyer of an existing business is essentially purchasing its future income. The earnings approach is more refined b
considers the future income potential of the business.
There are three versions of the earnings approach.
Variation 1: Excess Earnings Method. This method combines both the value of the firm's existing assets (over its liabi
an estimate of its future earnings potential to determine a business's selling price. One advantage of this technique is th
an estimate of goodwill. Goodwill is an intangible asset that often creates problems in a business sale. In fact, the mos
method of valuing a business is to compute its tangible net worth and then to add an often arbitrary adjustment for go
essence, goodwill is the difference between an established, successful business and one that has yet to prove itself. I
on the company’s reputation and its ability to attract customers. A buyer should not accept blindly the seller's arbitrary a
for goodwill because it is likely to be inflated.
The excess earnings method provides a more consistent and realistic approach for determining the value of goodwill. It
goodwill by the amount of profit the business earns above the average firm in the same industry. It also assumes that the
entitled to a reasonable return on the firm's adjusted tangible net worth..
Step 1: Compute adjusted tangible net worth.

Using the previous method of valuation, the buyer should compute the firm's adjusted tangible net worth.
Total tangible assets (adjusted for market value) minus total liabilities yields adjusted tangible net worth.
Step 2: Calculate the opportunity costs of investing in the business.

Overview
The XYZ Company
Opportunity Costs represent the cost of forgoing a choice. If the buyer chooses to purchase the assets of a business,
invest his money elsewhere. So, the opportunity cost of the purchase would be the amount the buyer could earn by inv
same amount in a similar risk investment.
There are three principal components in the rate of return used to value a business: (1) the basic, risk free return, (2) a
premium, and (3) the risk allowance for investing in the particular business. The basic, risk free return and the inflation
are reflected in investments like U. S. Treasury bonds. To determine the appropriate rate of return for investing in a bus
buyer must add to this base rate a factor reflecting the risk involved in purchasing the company. The greater the risk,
the rate of return. A normal-risk business typically indicates a 25 percent rate of return.

Overview
The XYZ Company
The second part of the buyer’s opportunity cost is the salary she could earn working for someone else.
Step 3: Project net earnings. The buyer must estimate the company's net earnings for the upcoming year before subtr
owner's salary. Averages can be misleading, so the buyer must be sure to investigate the trend of net earnings. Have
steadily over the past five years, dropped significantly remained relatively constant, or fluctuated wildly? The more er
earnings are, the more they will be discounted. Past income statements provide useful guidelines for estimating earnings
Step 4: Compute extra earning power. A company’s extra earning power is the difference between forecasted earning
and total opportunity costs (step 2). Most small businesses that are for sale do not have extra earning power (i.e
earnings). They show marginal or no profits.
Step 5: Estimate the value of intangibles. The owner can use the extra earning power of the business to estimate the v
intangible assets- that is, goodwill. Multiplying the extra earning power by a years of profit figure yields an estima
intangible assets’ value. The years of profit figure for a normal risk business ranges from three to four. A very high-risk
may have a years of profit figure of 1, while a well-established firm might use a figure of 7.
Step 6: Determine the value of the business. To determine the value of the business, the buyer simply adds the adjuste
net worth (step 1) and the value of the intangibles (step 5).
Both the buyer and seller should consider the tax implications of transferring goodwill. The amount the seller receives fo
is taxed as ordinary income. The buyer cannot count this amount as a deduction because goodwill is a capital asset th
be depreciated or amortized for tax purposes. Instead, the buyer would prefer to pay the seller for signing a coven
compete because its value is fully tax deductible.
The success of this approach depends on the accuracy of the buyer's estimates of net earnings and risk. But, it do
systematic method for assigning a value to goodwill.
Variation 2: Capitalized Earnings Approach. Another earnings approach capitalizes expected net profits to determine th
a business. The buyer should prepare his own pro forma income statement and should ask the seller to prepare one al
five year weighted average of past sales (with the greatest weights assigned to the most recent years) to estimate sal
upcoming year.
Once again, the buyer must evaluate the risk involved in purchasing the business to determine the appropriate rate of
the investment. The greater the risk involved, the higher the return the buyer requires. Risk determination is always s
subjective, but it is necessary for proper evaluation. The capitalized earnings approach divides estimated net earni
subtracting the owner's reasonable salary) by the rate of return that reflects the risk level. For example, the capitali
(assuming a reasonable salary of $25,000) would be:
net earnings ( after deducting owner's salary)

____________________________________
rate of return 25%
Clearly, firms with lower risk factors are more valuable. Most normal risk businesses use a rate of return factor rangin
percent to 33 percent. The lowest risk factor most buyers would accept for any business ranges from 15 to 20 percent.

Overview
The XYZ Company
Variation 3: Discounted Future Earnings Approach.
This variation of the earnings approach assumes that a dollar earned in the future is worth less than that same do
Therefore, using this approach, the buyer estimates the company's net income for several years into the future and then
these future earnings back to their present value. The resulting present value is an estimate of the company's worth. Th
value of future dollars has nothing to do with inflation. Instead, present value represents the cost of the buyer givi
opportunity to earn a reasonable rate of return by receiving income in the future instead of today. To illustrate the impo
the time value of money, consider two $1 million sweepstake winners. Rob wins $1 million in a sweepstakes, but he rec
$50,000 installments over 20 years. If Rob invested every installment at 15 percent interest, he would have acc
$5,890,505.98 at the end of 20 years. Lisa wins $1 million in another sweepstakes, but she collects her winnings in a lum
Lisa invested her $1 million today at 15 percent. She would have accumulated $16,366,537.39 at the end of twenty y
difference in their wealth is the result of the time value of money.
The discounted future earnings approach involves five steps.

Step 1: Project future earnings for five years into the future.
One way is to assume that earnings will grow by a constant amount over the next five years. Perhaps a better me
develop three forecasts-an optimistic, a pessimistic, and a most likely for each year and then find a weighted average
formula.
The buyer must remember that the farther into the future he forecasts, the less reliable are his estimates .
Step 2: Discount these future earnings at the appropriate present value rate.
The rate the buyer selects should reflect the rate he could earn on a similar risk investment.
Step 3: Estimate the income stream beyond five years.

One technique suggests multiplying the fifth year income by 1/rate of return.
Step 4: Discount the income estimate beyond five years using the present value factor for the sixth year.
Step 5: Compute the total value.
The primary advantage of this technique is that it values a business solely on the basis of its future earning potent
reliability depends on making forecasts of future earnings and on choosing a realistic present value rate. The discounted
technique is especially well-suited for valuing service businesses (whose asset bases are often small) and for c
experiencing high growth rates.
Market Approach.
The market (or price/earnings) approach uses the price/earnings ratios of similar businesses to establish the value of a
The buyer must use businesses whose stocks are publicly traded to get a meaningful comparison. A company's price
ratio (or P/E ratio) is the price of one share of its common stock in the market divided by its earnings per share (after
preferred stock dividends). To get a representative P/E ratio, the buyer should average the P/Es of as many similar busi
possible. To compute the company's value, the buyer multiplies the average price/earnings ratio by the private c
estimated earnings.
The biggest advantage of the market approach is its simplicity. But, this method suffers from several disadvantages, inc
following:
Necessary comparisons between publicly traded and privately owned companies. The stock of privately owned com
illiquid, and, therefore, the PIE ratio used is often subjective and lower than that of publicly held companies.
Unrepresentative earnings estimates. The private company's net earnings may not realistically reflect its true earning po
minimize taxes, owners usually attempt to keep profits low and rely on fringe benefits to make up the difference.

Overview
The XYZ Company
Finding similar companies for comparison. Often, it is extremely difficult for a buyer to find comparable publicly held c
when estimating the appropriate P/E ratio.
Applying the after-tax earnings of a private company to determine its value. If a prospective buyer is using an after-tax
from public companies, he also must use after-tax earnings from the private company.
Despite its drawbacks, the market approach is useful as a general guideline to establishing a company's value.

Overview
The XYZ Company
Conclusion
Which of these methods is best for determining the value of a small business? Simply stated, there is no single bes
Valuing a business is partly an art and partly a science. Using these techniques, a range of values will emerge. Buye
look for values that might cluster together and then use their best judgment to determine their offering price.

Overview
The XYZ Company
determining an acceptable price for the business. Business valuation is partly an art
e company's tangible assets usually poses no major problem, but assigning a price
ways creates controversy. The seller expects goodwill to reflect the hard work and
The buyer, however, is willing to pay extra only for those intangible assets that
e buyer and the seller arrive at a fair price? There are few universal rules in
arties should observe the following guidelines.
a business's worth since each business sale is unique.

y’s value using several techniques and then choose the one that makes the most
h parties. The seller must be satisfied with the price received for the business.
elling his baby. So, he does not want to leave a dime on the table. But, the buyer
d require heavy borrowing and would strain cash flows from the outset.
business records.
.
ould deal with one another honestly and in good faith.
usinesses is to get their future earning potential. The second most common reason
h easier to buy assets than to build them. Evaluation methods should take these
oo many business sellers and buyers depend on rules of thumb that ignore the
ple, cable TV franchises are valued at 11 times cash flow; advertising agencies at
at $500 to $1,000 per child enrolled; motels at $12,300 to $14,600 per room; and
s gross income. The problem is that such one size fits-all approaches seldom work
esses is "Don't use rules of thumb to value businesses.” If you rely on these rules
businesses sell for one third less than the accepted industry rule of thumb.
most commonly used methods of evaluating a business, although it is not highly

uation process. This method computes the company's net worth or owner's equity
ure as the value. The problem with this technique is that it fails to recognize reality:
exceed their reported book values.
included in the sale. In most cases, the owner has some personal assets he does
financial statement will likely differ significantly from actual net worth in the market.

Overview
The XYZ Company
ue. A more realistic method for determining a company's value is to adjust the book
e. The values reported on a company’s books may overstate or understate the true
a business sale include notes and accounts receivable, inventories, supplies, and
nts receivable, he should estimate the likelihood of their collection and adjust their
sses, inventory usually is the largest single asset involved in the sale. Taking a
termine accurately the quantity of goods to be transferred. The sale may include
method of valuation: raw materials, work in-process, and finished goods. The buyer
aluating the inventory First-in-first-out (FIFO), last-in-first out (LIFO), and average
but the most common methods use the cost of last purchase and the replacement
entory value, the buyer should evaluate the condition of the goods.
d without examining the inventory completely. After completing the sale, they
ouse they had neglected to inspect was warped and was of little value as building
business turned out not to be the good deal they had expected. To avoid such
owledgeable representative on an inventory team that counts the inventory and
merchandise that cannot be sold; but, by taking this precaution, a buyer minimizes
ory.
de land, buildings, equipment, and fixtures. Business owners frequently carry real
r actual market value. Equipment and fixtures, depending on their condition and
value of the business. Appraisals of these assets on insurance policies are helpful
et method suffer one major drawback: they do not consider the future earning
alue assets at current prices and do not consider them as tools for creating future
e of a business is based on its expected future earnings.
y purchasing its future income. The earnings approach is more refined because it
iness.
ach.
ethod combines both the value of the firm's existing assets (over its liabilities) and
etermine a business's selling price. One advantage of this technique is that it offers
ble asset that often creates problems in a business sale. In fact, the most common
s tangible net worth and then to add an often arbitrary adjustment for goodwill. In
n established, successful business and one that has yet to prove itself. It is based
ttract customers. A buyer should not accept blindly the seller's arbitrary adjustment
consistent and realistic approach for determining the value of goodwill. It measures
arns above the average firm in the same industry. It also assumes that the owner is
usted tangible net worth..
yer should compute the firm's adjusted tangible net worth.

) minus total liabilities yields adjusted tangible net worth.
ting in the business.

Overview
The XYZ Company
ng a choice. If the buyer chooses to purchase the assets of a business, he cannot
y cost of the purchase would be the amount the buyer could earn by investing the
te of return used to value a business: (1) the basic, risk free return, (2) an inflation
ng in the particular business. The basic, risk free return and the inflation premium
bonds. To determine the appropriate rate of return for investing in a business, the
cting the risk involved in purchasing the company. The greater the risk, the higher
lly indicates a 25 percent rate of return.

Overview
The XYZ Company
is the salary she could earn working for someone else.
estimate the company's net earnings for the upcoming year before subtracting the
o the buyer must be sure to investigate the trend of net earnings. Have they risen
nificantly remained relatively constant, or fluctuated wildly? The more erratic your
Past income statements provide useful guidelines for estimating earnings.
pany’s extra earning power is the difference between forecasted earnings (step 3)
mall businesses that are for sale do not have extra earning power (i.e., excess
owner can use the extra earning power of the business to estimate the value of its
g the extra earning power by a years of profit figure yields an estimate of the
ure for a normal risk business ranges from three to four. A very high-risk business
ell-established firm might use a figure of 7.
o determine the value of the business, the buyer simply adds the adjusted tangible
es (step 5).
ax implications of transferring goodwill. The amount the seller receives for goodwill
count this amount as a deduction because goodwill is a capital asset that cannot
. Instead, the buyer would prefer to pay the seller for signing a covenant not to
e.
e accuracy of the buyer's estimates of net earnings and risk. But, it does offer a
dwill.
nother earnings approach capitalizes expected net profits to determine the value of
pro forma income statement and should ask the seller to prepare one also. Use a
the greatest weights assigned to the most recent years) to estimate sales for the
nvolved in purchasing the business to determine the appropriate rate of return on

the higher the return the buyer requires. Risk determination is always somewhat
uation. The capitalized earnings approach divides estimated net earnings (after
the rate of return that reflects the risk level. For example, the capitalized value
uld be:
valuable. Most normal risk businesses use a rate of return factor ranging from 25
ost buyers would accept for any business ranges from 15 to 20 percent.

Overview
The XYZ Company
oach.
mes that a dollar earned in the future is worth less than that same dollar today.
ates the company's net income for several years into the future and then discounts
e. The resulting present value is an estimate of the company's worth. The reduced
inflation. Instead, present value represents the cost of the buyer giving up thc
by receiving income in the future instead of today. To illustrate the importance of
n sweepstake winners. Rob wins $1 million in a sweepstakes, but he receives it in
invested every installment at 15 percent interest, he would have accumulated
s $1 million in another sweepstakes, but she collects her winnings in a lump sum. If
nt. She would have accumulated $16,366,537.39 at the end of twenty years. The
e value of money.
volves five steps.

o the future.
w by a constant amount over the next five years. Perhaps a better method is to
mistic, and a most likely for each year and then find a weighted average using the
he future he forecasts, the less reliable are his estimates .

ppropriate present value rate.
e he could earn on a similar risk investment.
e years.
ar income by 1/rate of return.
ive years using the present value factor for the sixth year.
at it values a business solely on the basis of its future earning potential, but its
e earnings and on choosing a realistic present value rate. The discounted cash flow
g service businesses (whose asset bases are often small) and for companies
he price/earnings ratios of similar businesses to establish the value of a company.

are publicly traded to get a meaningful comparison. A company's price/earnings
its common stock in the market divided by its earnings per share (after deducting
tive P/E ratio, the buyer should average the P/Es of as many similar businesses as
the buyer multiplies the average price/earnings ratio by the private company's
is its simplicity. But, this method suffers from several disadvantages, including the
ed and privately owned companies. The stock of privately owned companies is

n subjective and lower than that of publicly held companies.
ate company's net earnings may not realistically reflect its true earning potential. To
profits low and rely on fringe benefits to make up the difference.

Overview
The XYZ Company
en, it is extremely difficult for a buyer to find comparable publicly held companies
mpany to determine its value. If a prospective buyer is using an after-tax P/E ratio
ax earnings from the private company.
useful as a general guideline to establishing a company's value.

Overview
The XYZ Company
ng the value of a small business? Simply stated, there is no single best method.
a science. Using these techniques, a range of values will emerge. Buyers should
hen use their best judgment to determine their offering price.
epared by JaxWorks Consultancy, Inc.

Balance Sheet Technique

Book Value of Net Worth = Assets minus Liabilities
= $4,167,200
= $2,450,000
Adjusted Balance Sheet Technique

Adjusted Net Worth = Adjusted Assets minus Liabilities
= $3,601,700
= $1,884,500
Earnings Approach
Variation 1 - Excess Earnings Method
Step 1 Adjusted tangible net worth equals
equals
Step 2 Opportunity Costs equals
Step 3 Estimated net earnings equals
Step 4 Extra earning power=estimated net earnings-opportunity cost =
equals
Step 5 Value of intangibles=extra earning power X years of profit figure =
equals
Step 6 Value of business tangible net worth + value of intangibles =
equals
Variation 2 - Capitalized Earnings Approach

net earnings
Value = --------------------------------------------------------------
Value = --------------------------------------------------------------
Value =
Variation 3 - Discounted Future Earnings Approach

Step 1 Projected future earnings approach
Year Pessimistic
5 $1,281,737
6 $1,484,567
7 $1,687,397
8 $1,890,226
9 $2,093,056
Step 2 Discount future earnings at the appropriate present value factor
Year Forecasted Earnings

5 $1,325,783

6 $1,535,583
7 $1,745,383
8 $1,955,183
9 $2,164,983

Step 3 Estimate income stream beyond 4 years
Income Stream = Fourth year income X
= $2,164,983
= $8,659,931
Step 4 Discount income stream beyond four years (using fifth year present value
Present value of income stream =
equals
Step 5 Compute the Total Value

Total Value = Step 2 + Step 4
Total Value = $3,737,878
Total Value = $5,343,083
Market Approach
Value = estimated earnings x Representative price-earnings ratio

Value = $1,325,783 Times
Value = $11,012,121
Summary of Approaches
Balance Sheet Technique
Adjusted Balance Sheet Technique
Earnings Approach Variation 1
Variation 2
Variation 3
Market Approach
Average
Median
Market Value Estimates
$12,000,000
$10,000,000
$8,000,000
$6,000,000
$4,000,000
$2,000,000
$12,000,000
$10,000,000
$8,000,000

$6,000,000
$4,000,000
$2,000,000
$0
Balance Sheet Technique Adjusted Balance Sheet Earnings Approach M
Technique

Assets minus Liabilities
$1,717,200
Adjusted Assets minus Liabilities

$1,717,200
$3,601,700 minus $1,717,200

$1,884,500
$596,125
$1,325,783
Extra earning power=estimated net earnings-opportunity cost =
$729,658
Value of intangibles=extra earning power X years of profit figure =
$3,648,290
Value of business tangible net worth + value of intangibles =
$5,532,790
net earnings
--------------------------------------------------------------------
rate of return
$1,325,783
---------------------------------------------------------------------
0.25
$5,303,132
Most Likely Optimistic Weighted Average

$1,321,378 $1,387,447 $1,325,783
$1,530,481 $1,607,005 $1,535,583
$1,739,584 $1,826,563 $1,745,383
$1,948,687 $2,046,121 $1,955,183
$2,157,790 $2,265,679 $2,164,983
Total $8,726,914
Discount future earnings at the appropriate present value factor
X Present Value Factor = Net Present Value

X 0.8000 $1,060,626

X 0.6400 $982,773
X 0.5120 $893,636
X 0.4096 $800,843
X 0.3277 $709,465
Total $3,737,878

1
--------------
Rate of Return
X 4.00
Discount income stream beyond four years (using fifth year present value factor)
$8,659,931 X 0.1854
$1,605,205
+ $1,605,205
estimated earnings x Representative price-earnings ratio

8.3
Base Price Base Price + Intangibles

$2,450,000 $2,582,000
$1,884,500 $2,016,500
$5,532,790 $5,664,790
$5,303,132 $5,435,132
$5,343,083 $5,475,083
$11,012,121 $11,144,121
$5,254,271 $5,386,271
$5,323,107 $5,455,107
Market Value Estimates

usted Balance Sheet Earnings Approach Market Approach
hnique

The XYZ Company
6200 XYZ Drive
Phone: (000) 000-0000
FAX: (000) 000-0000
November 10, 2020
Comparative Payroll Analysis
Payroll Analysis What-if

This analysis uses simple direct proportions.
Refer to it as a payroll performance snapshot in positive & negative situations. Use the spinners to
CURRENT NUMBER OF EMPLOYEES 37 CURRENT NUMBER OF EMPLOYEES

CURRENT SALES ANNUALIZED (Weekly X 52 Weeks) $3,399,968 CURRENT SALES ANNUALIZED (Weekly X
CURRENT COMPLETED YEAR SALES $3,285,454 CURRENT COMPLETED YEAR SALES
CURRENT PAYROLL ANNUALIZED (Weekly X 52 Weeks) $350,064 CURRENT PAYROLL ANNUALIZED (Weekly
PRIOR YEAR PAYROLL $313,647 PRIOR YEAR PAYROLL
SALES VOLUME REQUIRED, AT CURRENT PAYROLL LEVEL, TO PRODUCE PROFITS SALES VOLUME REQUIRED, AT CURRENT
EQUAL TO THE PREVIOUS YEAR PROFITS-------- $3,666,922 EQUAL TO THE PREVIOUS YEAR PROFITS
SALES DEFICIENCY = SALES REQUIRED MINUS CURRENT VOLUME SALES DEFICIENCY = SALES REQUIRED M
SALES DEFICIENCY IS--------------- ($266,954) SALES DEFICIENCY IS---------------
GROSS PAYROLL ALLOWABLE GROSS PAYROLL ALLOWABLE

UNDER PROJECTED CONDITIONS----- $324,579 UNDER PROJECTED CONDITIONS-----
GROSS PAYROLL BURDEN IS------ ($25,485) OR -8.1% GROSS PAYROLL BURDEN IS------
THE NUMBER OF NEEDED EMPLOYEES ON THE PAYROLL . . . . . . . . . . . . . . . . . . . . -3.01 THE NUMBER OF EXCESS EMPLOYEES ON

November 10, 2020
rative Payroll Analysis

Reset Spinners Calculator
What-if Payroll Analysis

What-if Analysis
Use the spinners to experiment with the payroll demand.
CURRENT NUMBER OF EMPLOYEES 37

CURRENT SALES ANNUALIZED (Weekly X 52 Weeks) $3,399,968 100%
CURRENT COMPLETED YEAR SALES $3,285,454 100%
CURRENT PAYROLL ANNUALIZED (Weekly X 52 Weeks) $350,064 100%
$313,647 100%
SALES VOLUME REQUIRED, AT CURRENT PAYROLL LEVEL, TO PRODUCE PROFITS

EQUAL TO THE PREVIOUS YEAR PROFITS-------- $3,666,922
SALES DEFICIENCY = SALES REQUIRED MINUS CURRENT VOLUME

SALES DEFICIENCY IS--------------- ($266,954)
GROSS PAYROLL ALLOWABLE

UNDER PROJECTED CONDITIONS----- $324,579
GROSS PAYROLL BURDEN IS------ ($25,485) OR -8.1%
THE NUMBER OF EXCESS EMPLOYEES ON THE PAYROLL . . . . . . . . . . . . . . . . . . . . . . -3.01
ed by JaxWorks Consultancy, Inc.

The XYZ Company
6200 XYZ Drive
Phone: (000) 000-0000
FAX: (000) 000-0000
November 10, 2020
COMPANY STOCK VALUATION

Return on incremental investment beginning 3rd Year 20%
Plowback rate beginning 3rd Year 30%
Weighted average cost of capital 12%
Tax rate 30%
Month
1
Sales
Earnings before interest and taxes (EBIT)
Taxes on EBIT
EBIAT
Current assets less marketable securities $1,112,200

Current liabilities $936,000
Adjusted net working capital $176,200
Gross property, plant and equipment $3,300,000

Accumulated depreciation $400,000
Net property, plant and equipment $2,900,000
Invested capital $3,076,200
EBIAT
Less change in invested capital
Free cash flow
Terminal value
Total
PV factor
PV of cash flow and terminal value
Cumulative PV
Enterprise value $11,089,274
Plus marketable securities $100,000
Less short-term debt ($936,000)
Less long-term debt ($601,200)
Equity value $9,652,074
Divide by number of shares outstanding 100,000

Value per share $96.52

November 10, 2020
MPANY STOCK VALUATION
Month Month Month

2 3 4
$2,560,000 $2,721,800 $3,285,454

$1,075,763 $1,141,485 $1,660,061
($322,729) ($342,445) ($498,018)
$753,034 $799,039 $1,162,043
$1,450,530 $2,087,750
$964,080 $993,002
$486,450 $1,094,748
$3,409,000 $3,646,160
$412,000 $424,360
$2,997,000 $3,221,800
$3,483,450 $4,316,548 $4,665,160
$753,034 $799,039 $1,162,043

($407,250) ($833,098) ($348,613)
$345,784 ($34,058) $813,430
$14,370,595
$345,784 ($34,058) $15,184,025
89.29% 79.72% 71.18%
$308,736 ($27,151) $10,807,689
$308,736 $281,585 $11,089,274


The XYZ Company
6200 XYZ Drive
Phone: (000) 000-0000
FAX: (000) 000-0000
November 10, 2020
Breakdown of Operating Costs

TOTAL OPERATING COSTS
COMPARATIVE PERIODS Month Month Month Month Trend
1 2 3 4 5
Total For Period $745,000 $871,350 $894,301 $915,467 $990,118
1 DAY $2,041 $2,387 $2,450 $2,508 $2,713
1 HOUR $85.05 $99.47 $102.09 $104.51 $113.03
1 MINUTE $1.42 $1.66 $1.70 $1.74 $1.88
LABOR EXPENSE
1 2 3 4 5
Total For Period $300,000 $315,000 $330,450 $346,364 $361,589
1 DAY $822 $863 $905 $949 $991
1 HOUR $34.25 $35.96 $37.72 $39.54 $41.28
1 MINUTE $0.57 $0.60 $0.63 $0.66 $0.69
MATERIAL EXPENSE
1 2 3 4 5
Total For Period $320,000 $427,600 $431,238 $432,513 $488,132
1 DAY $877 $1,172 $1,181 $1,185 $1,337
1 HOUR $36.53 $48.81 $49.23 $49.37 $55.72
1 MINUTE $0.61 $0.81 $0.82 $0.82 $0.93
OTHER EXPENSES
1 2 3 4 5
Total For Period $125,000 $128,750 $132,613 $136,591 $140,397
1 DAY $342 $353 $363 $374 $385
1 HOUR $14.27 $14.70 $15.14 $15.59 $16.03
1 MINUTE $0.24 $0.24 $0.25 $0.26 $0.27

Altman's Z-Scores Explained
Publicly Held Firms

Altman's model is probably the classic of this genre. The original data sample consisted
of 66 firms, half of which had filed for bankruptcy under Chapter 7. All businesses in the
database were manufacturers, and small firms with assets of less than $1 million were eliminated.
The Z-Score formula is as follows:

Z = 1.2X.sub.1 + 1.4X.sub.2 + 3.3X.sub.3 + 0.6X.sub.4 + 1.0X.sub.5
Where X.sub.1 = Working Capital/Total Assets.
Where X.sub.2 = Retained Earnings/Total Assets. This is a measure of cumulative

profitability that reflects the firm's age as well as earning power. Many studies have shown
failure rates to be closely related to the age of the business.
Where X.sub.3 = Earnings Before Income Taxes/Total Assets. This is a measure of

operating efficiency separated from any leverage effects. It recognizes operating earnings
as a key to long-run viability.
Where X.sub.4 = Market Value of Equity/Book Value of Debt. This ratio adds a market
dimension. Academic studies of stock markets suggest that security price changes may
foreshadow upcoming problems.
Where X.sub.5 = Sales/Total Assets. This is a standard turnover measure. Unfortunately,

it varies greatly from one industry to another.
Privately Held Firms.

If a firm's stock is not publicly traded, the X4 term (Market Value of Equity/Book Value of
Debt) cannot be calculated. To correct for this problem, the Z score can be re-estimated
using book values of equity. This provides the following score:
Z.sub.1 = .717X.sub.1 + .847X.sub.2 + 3.107X.sub.3 + .420X.sub.4 + .998X.sub.5
Nonmanufacturing-Small Business-Merchandising and Service firms Firms.

The X.sub.5 (Sales/Total Assets) ratio is believed to vary significantly by industry. It is likely
to be higher for merchandising and service firms than for manufacturers, since the former are
typically less capital intensive. Consequently, nonmanufacturers would have significantly higher
asset turnover and Z scores. The model is thus likely to underpredict certain sorts of bankruptcy.
To correct for this potential defect, Altman recommends the following correction that eliminates
the X.sub.5 ratio:
Z.sub.11 = 6.56X.sub.1 + 3.26X.sub.2 + 6.72X.sub.3 + 1.05X.sub.4

The Altman Z-Score Analysis - Publicly Held Firm
Check your Z-Score: How's your Fiscal Fitness?
Routinely used by Stockbrokers trying to determine if a company is a good investment, Bankers to

determine loan risk, and internally, by anyone who wants to take close look at their own company's
financial health.
Data Needed:(Linked From The "Master Data Entry" and Other Worksheets)
• Earnings before taxes
• Total assets
• Net Sales
• Market Value of Equity
• Total Liabilities
• Working Capital
• Retained Earnings
The worksheet will indicate:

The short-term potential for financial problems at your company.
The Expert
Edward I. Altman, Professor and Vice-Director of New York University's Salomon Center,
Leonard N. Stern School of Business.
Dr. Altman is known as the founding father of using statistical techniques to predict company failure.
He developed the Z-Score analysis almost 30 years ago, and is the author of several books, including
The Z-Score Bankruptcy Model: Past, Present, and Future (New York: John Wiley & Sons, 1977),
and Corporate Financial Distress and Bankruptcy, 2nd edition (New York: John Wiley & Sons, 1993).
The Analysis
The original data sample consisted of 66 firms, half of which had filed for bankruptcy under Chapter 7.
All businesses in the database were manufacturers, and small firms with assets of less than $1 million
were eliminated.
Altman's Z-score calculates five ratios:

1. return on total assets,
2. sales to total assets,
3. equity to debt,
4. working capital to total assets, and
5. retained earnings to total assets.
These ratios are then multiplied by a predetermined weight factor, and the results are added together.
The final number--the Z-score--yields a number between -4 and +8. Financially-sound companies show
Z-scores above 2.99, while those scoring below 1.81 are in fiscal danger, maybe even heading toward
bankruptcy. Scores that fall between these ends indicate potential trouble. In Altman's initial study
of 66 bankrupt companies, Z-scores for 95 % of these companies pointed to trouble or imminent
bankruptcy.

The Altman Z-Score Analysis - Publicly Held Firm
Although the numbers that go into calculating the Z-score (and a company's financial soundness)
are sometimes influenced by external factors, it provides a good quick analysis of where your company
stands compared to the competition, and a good tool for analyzing the ups and downs of your company's
financial stability over time.
The Altman Z-Score Analysis Process
x Weight x Weighted
Ratio Formula Factor Ratio
Return on Total Assets Earnings Before Interest and Taxes Varies by Varies by
Total Assets Category Category
Sales to Total Assets Net Sales Varies by Varies by
Equity to Debt Market Value of Equity Varies by Varies by
Total Liabilities Category Category
Working Capital to Total Assets Working Capital Varies by Varies by
Retained Earnings to Total Asset Retained Earnings Varies by Varies by
Your Z-Score if Publicly Held Firm

1 2 3 4
Publicly Held Firm 2.40 2.70 3.04 3.51
KEY:
Z-SCORE ABOVE 2.99--YOU'RE IN GOOD SHAPE
Z-SCORE BETWEEN 2.99 and 1.81--WARNING SIGNS
Z-SCORE BELOW 1.81--BIG TROUBLE--COULD BE HEADING TOWARD BANKRUPTCY

Z-Score Analysis Publicly Held
Z-Score Analysis - Publicly Held
4.00
3.51
3.50
3.04
3.00 2.70
2.40
2.50
2.00
1.50
1.00
0.50
0.00 Periods
Z-Score Publicly Held

Analysis Publicly Held
Z-Score Analysis - Publicly Held
3.51
3.04
2.70
Periods
Z-Score Publicly Held

The Altman Z-Score Analysis - Privately Held Firm

financial health.
• Total assets
• Net Sales
• Working Capital

The Expert
The Analysis
were eliminated.

3. equity to debt,
bankruptcy.

The Altman Z-Score Analysis - Privately Held Firm
x Weight x Weighted
Your Z-Score if Privately Held Firm

1 2 3 4
Privately Held Firm 1.35 1.68 1.62 1.88
KEY:

Z-Score Analysis Privately Held
Z-Score Analysis - Privately Held
2.00 1.88
1.80 1.68
1.62
1.60
1.35
1.40
1.20
1.00
0.80
0.60
0.40
0.20
0.00 Periods
Z-Score Privately Held

Analysis Privately Held
Z-Score Analysis - Privately Held
1.88
1.68
1.62
Periods
Z-Score Privately Held

The Altman Z-Score Analysis - Nonmanufacturing

financial health.
• Total assets
• Net Sales
• Working Capital

The Expert
The Analysis
were eliminated.

3. equity to debt,
bankruptcy.

The Altman Z-Score Analysis - Nonmanufacturing
x Weight x Weighted
Your Z-Score if Small Business, Service, Retail Sales, or Wholesaler

1 2 3 4
Nonmanufacturing 4.09 4.83 5.89 7.02
KEY:

Z-Score Analysis Nonmanufacturing
Z-Score Analysis - Nonmanufacturing
8.00
7.02
7.00
5.89
6.00
4.83
5.00
4.09
4.00
3.00
2.00
1.00
0.00 Periods
Z-Score Nonmanufacturing

nalysis Nonmanufacturing
Z-Score Analysis - Nonmanufacturing
7.02
5.89
4.83
Periods
Z-Score Nonmanufacturing

Z-Score Analysis
Category 1 2 3
Altman Z Score - Publicly Held 2.40 2.70 3.04
Altman Z Score - Privately Held 1.35 1.68 1.62
Altman Z Score - Non-manufacturing 4.09 4.83 5.89

Z-Score Analysis
Category 4
Altman Z Score - Publicly Held 3.51
Altman Z Score - Privately Held 1.88
Altman Z Score - Non-manufacturing 7.02

Return-on-Investment (ROI) Analysis
Cash flow and ROI statement
YEAR
BENEFIT DRIVERS
0 1
Greater margin driven by higher production capacity $500,000
Improved cycle time benefits:
Reduced energy cost due to less running time 125,000
Reduced labor cost due to less running time 500,000
Fewer accidents, resulting in less workers' compensation 100,000
Improved quality benefits:
Fewer defects, resulting in less rework 250,000
Fewer customer returns, resulting in less reprocessing costs 50,000
Reduced time spent handling customer complaints 50,000
<Benefit driver>
<Benefit driver>
<Benefit driver>
<Benefit driver>
Total annual benefits $1,575,000
Implementation filter 85%
Total benefits realized $1,338,750

Costs Year 0 Year 1
Total $1,650,000 $125,000
Benefits Year 0 Year 1

Annual benefit flow ($1,650,000) $1,213,750
Cumulative benefit flow (1,650,000) (436,250)
Discounted benefit flow Year 0 Year 1

Discounted costs $1,650,000 $108,696
Discounted benefits 0 1,164,130
Total discounted benefit flow (1,650,000) 1,055,435
Total cumulative discounted benefit flow (1,650,000) (594,565)
Initial investment Year 0 Year 1

Initial investment $1,200,000 $0
Implementation costs 400,000 0
Ongoing support costs 0 100,000
Training costs 50,000 25,000
Other costs 0 0
Total costs $1,650,000 $125,000
ROI measures
Cost of capital 15%
Net present value $2,223,632
Return on investment 66%
Payback (in years) 1.24
Return on investment
250%
200%
150%
100%
50%
0%
Year 1 Year 2 Year 3

YEAR
2 3
$1,000,000 $1,250,000
125,000 125,000
500,000 500,000
100,000 100,000
300,000 300,000
75,000 75,000
75,000 75,000
$2,175,000 $2,425,000
90% 95%
$1,957,500 $2,303,750

Year 2 Year 3
$125,000 $125,000
Year 2 Year 3
$1,832,500 $2,178,750
1,396,250 3,575,000
Year 2 Year 3
$94,518 $82,190
1,480,151 1,514,753
1,385,633 1,432,563
791,068 2,223,632
Year 2 Year 3
$0 $0
0 0
100,000 100,000
25,000 25,000
0 0
$125,000 $125,000
143% 215%
Return on investment
Year 2 Year 3

Small Business Headcount and Payroll Analysis
HEADCOUNT SUMMARY Q1 Q2 Q3
Executive
Owner 1.00 1.00 1.00
Chief financial officer 1.00 1.00 1.00
Open
Total 2.00 2.00 2.00
Finance
Financial Analyst 1.00 1.00 1.00
Credit Analyst 1.00 1.00 1.00
Open
Total 2.00 2.00 2.00
Human Resources
Director 1.00 1.00 1.00
Open
Open
Total 1.00 1.00 1.00
Information Technology
Director 1.00 1.00 1.00
Open
Total 1.00 1.00 1.00
Accounting
Controller 1.00 1.00 1.00
Open
Total 1.00 1.00 1.00
Sales
Sales Manager 1.00 1.00 1.00
Sales Representatives 2.00 2.00 2.00
Open
Total 3.00 3.00 3.00

Small Business Headcount and Payroll Analysis
Operations
Director 1.00 1.00 1.00
Open
Total 1.00 1.00 1.00
Marketing
Director 1.00 1.00 1.00
Open
Total 1.00 1.00 1.00
Corporate totals 12.00 12.00 12.00
SUMMARY DATA BY DEPARTMENT

Total number
Department Total salary
of employees
Executive 8 $150,000
Finance 8 55,000
Human Resources 4 40,000
Information Technology 4 40,000
Accounting 4 30,000
Sales 12 158,000
Operations 4 30,000
Marketing 0 35,000
Corporate Totals 44 $538,000
Total number
Department % of total
of employees
Executive 8 18.2%
Finance 8 18.2%
Human Resources 4 9.1%
Information Technology 4 9.1%
Accounting 4 9.1%
Sales 12 27.3%
Operations 4 9.1%
Marketing 0 0.0%
Corporate Totals 44 100.0%

Annual
Q4 Annual total Q1 cost Q2 cost Q3 cost Q4 cost
salary
1.00 4.00 $100,000 $25,000 $25,000 $25,000 $25,000

1.00 4.00 50,000 12,500 12,500 12,500 12,500
0.00 0 0 0 0
2.00 8.00 $37,500 $37,500 $37,500 $37,500
1.00 4.00 $30,000 $7,500 $7,500 $7,500 $7,500

1.00 4.00 25,000 6,250 6,250 6,250 6,250
0.00 0 0 0 0
2.00 8.00 $13,750 $13,750 $13,750 $13,750
1.00 4.00 $40,000 $10,000 $10,000 $10,000 $10,000

0.00 0 0 0 0
0.00 0 0 0 0
1.00 4.00 $10,000 $10,000 $10,000 $10,000
1.00 4.00 $40,000 $10,000 $10,000 $10,000 $10,000

0.00 0 0 0 0
1.00 4.00 $10,000 $10,000 $10,000 $10,000
1.00 4.00 $30,000 $7,500 $7,500 $7,500 $7,500

0.00 0 0 0 0
1.00 4.00 $7,500 $7,500 $7,500 $7,500
1.00 4.00 $40,000 $10,000 $10,000 $10,000 $10,000

2.00 8.00 59,000 29,500 29,500 29,500 29,500
0.00 0 0 0 0
3.00 12.00 $39,500 $39,500 $39,500 $39,500

Annual
salary
1.00 4.00 $30,000 $7,500 $7,500 $7,500 $7,500

0.00 0 0 0 0
1.00 4.00 $7,500 $7,500 $7,500 $7,500
1.00 4.00 $35,000 $8,750 $8,750 $8,750 $8,750

0.00 0 0 0 0
1.00 0.00 $8,750 $8,750 $8,750 $8,750
12.00 44.00 $134,500 $134,500 $134,500 $134,500
Salary + Variable Variable Stock-based

Benefits
benefits compensation % pay compensation
$37,500 $187,500 15.0% $22,500 $20,000
13,750 68,750 6.0% 3,300.00 5,000.00
10,000 50,000 5.0% 2,000.00 0.00
10,000 50,000 5.0% 2,000.00 0.00
7,500 37,500 5.0% 1,500.00 0.00
39,500 197,500 20.0% 31,600.00 0.00
7,500 37,500 10.0% 3,000.00 0.00
8,750 43,750 5.0% 1,750.00 0.00
$134,500 $672,500 $67,650 $25,000
Total comp % of total

$230,000 30.1%
77,050 10.1%
52,000 6.8%
52,000 6.8% Quarterly metrics:
39,000 5.1% Salary Benefits Salary + benefits
229,100 29.9% Q1 $134,500 $33,625 $168,125
40,500 5.3% Q2 134,500 33,625 168,125
45,500 5.9% Q3 134,500 33,625 168,125
Q4 134,500 33,625 168,125
$765,150 100.0% $538,000 $134,500 $672,500

Annual cost
$100,000
50,000
0
$150,000
$30,000
25,000
0
$55,000
$40,000
0
0
$40,000
$40,000
0
$40,000
$30,000
0
$30,000
$40,000
118,000
0
$158,000

Annual cost
$30,000
0
$30,000
$35,000
0
$35,000
$538,000
Total compensation
$230,000
77,050.00
52,000.00
52,000.00
39,000.00
229,100.00
40,500.00
45,500.00
$765,150

Corporate Headcount and Payroll Analysis
Executive
Chief executive officer 1.00 1.00 1.00
Chief financial officer 1.00 1.00 1.00
Chief operating officer 1.00 1.00 1.00
Chief information officer 1.00 1.00 1.00
President 1.00 1.00 1.00
Total 5.00 5.00 5.00
Finance
Vice president 1.00 1.00 1.00
Financial planning director 1.00 1.00 1.00
Financial analyst 2.00 2.00 2.00
Credit analyst 1.00 1.00 1.00
Advisor 1.00 1.00 1.00
Total 6.00 6.00 6.00
Human Resources
Director 1.00 1.00 1.00
Senior human resource representative 2.00 2.00 2.00
Benefits coordinator 1.00 1.00 1.00
Compensation manager 2.00 2.00 2.00
Human resource generalist 2.00 2.00 2.00
Payroll 1.00 1.00 1.00
Trainer
Recruiter
Total 10.00 10.00 10.00
Information Technology
Director 1.00 1.00 1.00
Systems engineer 2.00 2.00 2.00
Systems analyst 1.00 1.00 1.00
Technician 1.00 1.00 2.00
Support 2.00 2.00 2.00
Architect 1.00 1.00 1.00
Programmer 1.00 1.00 1.00
Total 10.00 10.00 11.00
Accounting

Controller 1.00 1.00 1.00
Accounting manager 1.00 1.00 1.00
Accounts receivable 1.00 1.00 1.00
Accounts payable 1.00 1.00 1.00
Treasury 1.00 1.00 1.00
General accountant 1.00 1.00 1.00
Total 7.00 7.00 7.00
Sales
Regional director 2.00 2.00 2.00
Business development 1.00 1.00 1.00
Direct sales representative 4.00 4.00 4.00
Inside sales 1.00 1.00 1.00
Sales operations 1.00 1.00 1.00
Channel sales representative 1.00 1.00 1.00
Total 11.00 11.00 11.00

Operations
Director 1.00 1.00 1.00
Manager 1.00 1.00 1.00
Floor manager 5.00 5.00 5.00
Assistant 1.00 1.00 1.00
Total 9.00 9.00 9.00
Marketing
Director 1.00 1.00 1.00
Product manager 1.00 1.00 1.00
Market research 1.00 1.00 1.00
Market analyst 1.00 1.00 1.00
Product manager 1.00 1.00 1.00
Merchandiser 1.00 1.00 1.00
Assistant 1.00 1.00 1.00
Total 8.00 8.00 8.00
Corporate totals 66.00 66.00 67.00
SUMMARY DATA BY DEPARTMENT

Total number
Department Total salary
of employees
Executive 20 $1,240,000
Finance 24 680,000
Human Resources 40 835,000
Information Technology 42 950,000
Accounting 28 540,000
Sales 44 1,000,000
Operations 36 705,000
Marketing 20 690,000
Corporate Totals 254 $6,640,000
Total number
Department % of total
of employees
Executive 20 7.9%
Finance 24 9.4%
Human Resources 40 15.7%
Information Technology 42 16.5%

Accounting 28 11.0%
Sales 44 17.3%
Operations 36 14.2%
Marketing 20 7.9%
Corporate Totals 254 100.0%

Annual
salary
1.00 4.00 $300,000 $75,000 $75,000 $75,000 $75,000

1.00 4.00 250,000 62,500 62,500 62,500 62,500
1.00 4.00 225,000 56,250 56,250 56,250 56,250
1.00 4.00 225,000 56,250 56,250 56,250 56,250
1.00 4.00 240,000 60,000 60,000 60,000 60,000
0.00 0 0 0 0
5.00 20.00 $310,000 $310,000 $310,000 $310,000
1.00 4.00 $200,000 $50,000 $50,000 $50,000 $50,000

1.00 4.00 125,000 31,250 31,250 31,250 31,250
2.00 8.00 100,000 50,000 50,000 50,000 50,000
1.00 4.00 70,000 17,500 17,500 17,500 17,500
1.00 4.00 85,000 21,250 21,250 21,250 21,250
0.00 0 0 0 0
6.00 24.00 $170,000 $170,000 $170,000 $170,000
1.00 4.00 $140,000 $35,000 $35,000 $35,000 $35,000

1.00 4.00 100,000 25,000 25,000 25,000 25,000
2.00 8.00 80,000 40,000 40,000 40,000 40,000
1.00 4.00 75,000 18,750 18,750 18,750 18,750
2.00 8.00 75,000 37,500 37,500 37,500 37,500
2.00 8.00 65,000 32,500 37,500 37,500 37,500
1.00 4.00 65,000 16,250 16,250 16,250 16,250
0.00 65,000 0 0 0 0
0.00 65,000 0 0 0 0
0.00 0 0 0 0
10.00 40.00 $205,000 $210,000 $210,000 $210,000
1.00 4.00 $140,000 $35,000 $35,000 $35,000 $35,000

1.00 4.00 110,000 27,500 27,500 27,500 27,500
2.00 8.00 90,000 45,000 45,000 45,000 45,000
1.00 4.00 90,000 22,500 22,500 22,500 22,500
2.00 6.00 80,000 20,000 20,000 40,000 40,000
2.00 8.00 75,000 37,500 37,500 37,500 37,500
1.00 4.00 80,000 20,000 20,000 20,000 20,000
1.00 4.00 80,000 20,000 20,000 20,000 20,000
0.00 0 0 0 0
11.00 42.00 $227,500 $227,500 $247,500 $247,500
1.00 4.00 $130,000 $32,500 $32,500 $32,500 $32,500

Annual
salary
1.00 4.00 95,000 23,750 23,750 23,750 23,750
1.00 4.00 75,000 18,750 18,750 18,750 18,750
1.00 4.00 55,000 13,750 13,750 13,750 13,750
1.00 4.00 55,000 13,750 13,750 13,750 13,750
1.00 4.00 75,000 18,750 18,750 18,750 18,750
1.00 4.00 55,000 13,750 13,750 13,750 13,750
0.00 0 0 0 0
7.00 28.00 $135,000 $135,000 $135,000 $135,000
1.00 4.00 $120,000 $30,000 $30,000 $30,000 $30,000

2.00 8.00 100,000 50,000 50,000 50,000 50,000
1.00 4.00 90,000 22,500 22,500 22,500 22,500
4.00 16.00 90,000 90,000 90,000 90,000 90,000
1.00 4.00 75,000 18,750 18,750 18,750 18,750
1.00 4.00 75,000 18,750 18,750 18,750 18,750
1.00 4.00 80,000 20,000 20,000 20,000 20,000
0.00 0 0 0 0
11.00 44.00 $250,000 $250,000 $250,000 $250,000

Annual
salary
1.00 4.00 $150,000 $37,500 $37,500 $37,500 $37,500

1.00 4.00 100,000 25,000 25,000 25,000 25,000
1.00 4.00 85,000 21,250 21,250 21,250 21,250
5.00 20.00 65,000 81,250 81,250 81,250 81,250
1.00 4.00 45,000 11,250 11,250 11,250 11,250
0.00 0 0 0 0
9.00 36.00 $176,250 $176,250 $176,250 $176,250
1.00 4.00 $135,000 $33,750 $33,750 $33,750 $33,750

1.00 4.00 105,000 26,250 26,250 26,250 26,250
1.00 4.00 90,000 22,500 22,500 22,500 22,500
1.00 4.00 75,000 18,750 18,750 18,750 18,750
1.00 4.00 75,000 18,750 18,750 18,750 18,750
1.00 4.00 90,000 22,500 22,500 22,500 22,500
1.00 4.00 70,000 17,500 17,500 17,500 17,500
1.00 4.00 50,000 12,500 12,500 12,500 12,500
0.00 0 0 0 0
8.00 20.00 $172,500 $172,500 $172,500 $172,500
67.00 254.00 $1,646,250 $1,651,250 $1,671,250 $1,671,250
Salary + Variable Variable Stock-based

Benefits
benefits compensation % pay compensation
$310,000 $1,550,000 15.0% $186,000 $200,000
170,000 850,000 10.0% 68,000.00 50,000.00
208,750 1,043,750 5.0% 41,750.00 0.00
237,500 1,187,500 5.0% 47,500.00 0.00
135,000 675,000 5.0% 27,000.00 0.00
250,000 1,250,000 40.0% 400,000.00 0.00
176,250 881,250 10.0% 70,500.00 0.00
172,500 862,500 5.0% 34,500.00 0.00
$1,660,000 $8,300,000 $875,250 $250,000
Total comp % of total

$1,936,000 20.5%
968,000 10.3%
1,085,500 11.5%
1,235,000 13.1% Quarterly metrics:

Annual
salary
702,000 7.4% Salary Benefits Salary + benefits
1,650,000 17.5% Q1 $1,646,250 $411,563 $2,057,813
951,750 10.1% Q2 1,651,250 412,813 2,064,063
897,000 9.5% Q3 1,671,250 417,813 2,089,063
Q4 1,671,250 417,813 2,089,063
$9,425,250 100.0% $6,640,000 $1,660,000 $8,300,000

Annual cost
$300,000
250,000
225,000
225,000
240,000
0
$1,240,000
$200,000
125,000
200,000
70,000
85,000
0
$680,000
$140,000
100,000
160,000
75,000
150,000
145,000
65,000
0
0
0
$835,000
$140,000
110,000
180,000
90,000
120,000
150,000
80,000
80,000
0
$950,000
$130,000

Annual cost
95,000
75,000
55,000
55,000
75,000
55,000
0
$540,000
$120,000
200,000
90,000
360,000
75,000
75,000
80,000
0
$1,000,000

Annual cost
$150,000
100,000
85,000
325,000
45,000
0
$705,000
$135,000
105,000
90,000
75,000
75,000
90,000
70,000
50,000
0
$690,000
$6,640,000
Total compensation
$1,936,000
968,000.00
1,085,500.00
1,235,000.00
702,000.00
1,650,000.00
951,750.00
897,000.00
$9,425,250

Annual cost

Copyright Notice
© 2010, JaxWorks
All rights reserved.
Specifications are subject to change without notice.
MicroShots™ is a registered trademarks of Jaxworks and affiliated companies. All other brands or products are tradema
holders and should be treated as such.
NOTICES REGARDING SOFTWARE, DOCUMENTS AND SERVICES.
IN NO EVENT SHALL JAXWORKS BE LIABLE FOR ANY SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES OR
RESULTING FROM LOSS OF USE, DATA OR PROFITS, WHETHER IN AN ACTION OF CONTRACT, NEGLIGENCE
OUT OF OR IN CONNECTION WITH THE USE OR PERFORMANCE OF SOFTWARE, DOCUMENTS, PROVISION O
INFORMATION AVAILABLE FROM THIS PROGRAM.

Copyright Notice
tice.
works and affiliated companies. All other brands or products are trademarks or registered trademarks of their respective
MENTS AND SERVICES.
E FOR ANY SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES WHATSOEVER

PROFITS, WHETHER IN AN ACTION OF CONTRACT, NEGLIGENCE OR OTHER TORTIOUS ACTION, ARISING
E OR PERFORMANCE OF SOFTWARE, DOCUMENTS, PROVISION OF OR FAILURE TO PROVIDE SERVICES, OR
GRAM.

License Agreement
Products by JaxWorks
Copyright (C) 2010 JaxWorks
All Rights Reserved
WARNING
=================
This program is protected by copyright law and international treaties.

Unauthorized reproduction or distribution of this program, or any portion
of it may result in severe civil and criminal penalties, and will be
prosecuted to the maximum extent possible under law.
LICENSE AGREEMENT
=================
You should read the following terms and conditions carefully before using
this software. Your use of this software indicates your full acceptance of
this license agreement and warranty.
LICENSE AGREEMENT
======================================
1. GRANTING OF LICENSE. JaxWorks, as Licenser, grants to you, the Licensee,

a non-exclusive license to use this software program (hereinafter referred
to as the "SOFTWARE") in accordance with the terms contained in this license.
You may use the SOFTWARE on a single desk top computer and one notebook computer.
You may access the SOFTWARE through a network, provided that you have obtained individual
licenses for the software to cover all workstations that will access the software through
the network.
2. COPYRIGHT. All title and copyrights in and to the SOFTWARE, including but
not limited to any images, texts, and sounds incorporated into the SOFTWARE,
are owned by JaxWorks.
3. REDISTRIBUTION. You CAN NOT freely distribute this SOFTWARE.
4. DISCLAIMER OF WARRANTY. THE SOFTWARE AND THE ACCOMPANYING FILES ARE PROVIDED
"AS IS" WITHOUT WARRANTY OF ANY KIND. TO THE MAXIMUM EXTENT PERMITTED BY
APPLICABLE LAW, JAXWORKS DISCLAIMS ALL WARRANTIES, EXPRESSED OR IMPLIED,
INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED WARRANTIES OF PERFORMANCE,
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND NONINFRINGEMENT.
TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, IN NO EVENT SHALL JAXWORKS
BE LIABLE FOR ANY DIRECT, INDIRECT, CONSEQUENTIAL OR INCIDENTAL DAMAGES
(INCLUDING, BUT NOT LIMITED TO, DAMAGES FOR LOSS OF BUSINESS PROFITS, BUSINESS
INTERRUPTION OR LOSS OF BUSINESS INFORMATION) ARISING OUT OF THE USE OF OR
INABILITY TO USE THE SOFTWARE, EVEN IF JAXWORKS HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES.
JaxWorks
http://www.jaxworks.com

License Agreement
nal treaties.
or any portion
will be
lly before using

acceptance of
nts to you, the Licensee,

einafter referred
ntained in this license.
mputer and one notebook computer.

rovided that you have obtained individual
t will access the software through
TWARE, including but

into the SOFTWARE,
his SOFTWARE.
THE ACCOMPANYING FILES ARE PROVIDED

MAXIMUM EXTENT PERMITTED BY
ANTIES, EXPRESSED OR IMPLIED,
RRANTIES OF PERFORMANCE,
RPOSE, AND NONINFRINGEMENT.
BLE LAW, IN NO EVENT SHALL JAXWORKS
NTIAL OR INCIDENTAL DAMAGES
OSS OF BUSINESS PROFITS, BUSINESS
ON) ARISING OUT OF THE USE OF OR
RKS HAS BEEN ADVISED OF THE


Microshots 2010

Uploaded by

Copyright:

Available Formats

Microshots 2010

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Microshots 2010

Uploaded by

Copyright:

Available Formats

The XYZ Company

Comparative Balance Sheet - 4 Periods

Month Month Month Month

© Copyright, 2004, JaxWorks, All Rights Reserved.

Also included Free are:

JaxWorks Small Business Spreadsheet Factory

Please Note: There is No Support For Free Downloads

about MS Excel and other applications in the Office suite

© Copyright, 2010, JaxWorks, All Rights Reserved.

Please Note: There is No Support For Free Downloads

© Copyright, 2009, JaxWorks, All Rights Reserved.

es in the "Master Data Entry" worksheet.

oShots" worksheet for some amazing fast analysis results.

Copyright, 2010, JaxWorks, All Rights Reserved.

Note: There is No Support For Free Downloads

© Copyright, 2009, JaxWorks, All Rights Reserved.

Financial Analysis Z-Score Analysis Special Analysis

© Copyright, 2010, JaxWorks, All Rights Reserved.

© Copyright, 2009, JaxWorks, All Rights Reserved.

Gross Profit $1,215,000 $1,628,650

© Copyright, 2009, JaxWorks, All Rights Reserved.

Operating income $656,240 $1,044,863

Other income and expenses 1 2

Income before tax $686,240 $1,075,763

Income taxes $205,872 $322,729

Net income $480,368 $753,034

Return On Ownership $670,368 $944,034

© Copyright, 2009, JaxWorks, All Rights Reserved.

Other assets $25,000 $25,750

LIABILITIES AND STOCKHOLDERS' EQUITY

Total Liabilities $1,717,200 $1,773,680

© Copyright, 2009, JaxWorks, All Rights Reserved.

Total Liabilities and Equity $4,167,200 $4,094,180

Amount sheet is out-of-balance $0 $510,000

Summary Extractions & Additional Data Entries

© Copyright, 2009, JaxWorks, All Rights Reserved.

Financing Data (0 on) Depreciation Capital

Gross profit $1,055,000 $635,000

Operating income $581,000 $265,542

Other income and expenses

© Copyright, 2009, JaxWorks, All Rights Reserved.

Income before tax $701,000 $325,542

Income taxes $210,300 $97,663

Net income $490,700 $227,879

Retained earnings-beginning $1,400,000 $1,890,700

Retained earnings-ending $1,890,700 $2,118,579

Detailed Supporting Information

Depreciation: Enter the numbers of years.

Interest: Percentages from Data sheet

Cash Flow Balance Sheet Entries

© Copyright, 2009, JaxWorks, All Rights Reserved.

Other assets $25,000 $33,000

Total Liabilities $1,716,000 $1,464,355

Total Liabilities and Equity $3,266,000 $3,505,055

"C" Corporation (Y/N) Y

© Copyright, 2009, JaxWorks, All Rights Reserved.

© Copyright, 2009, JaxWorks, All Rights Reserved.

© Copyright, 2009, JaxWorks, All Rights Reserved.

© Copyright, 2009, JaxWorks, All Rights Reserved.