Tipton Case Study

Exhibit 2

Income Statement (000s)

1995

1996

Net Sales

 $100,000

 = 100,000 *1.25

 $125,000

Cost of Goods

 79,000

Given

 93,750

 98,750.00

Gross Profit

 21,000

 31,250

0.25

6.50

Administrative & Selling Expenses

 10,000

 = 10,000 * 1.2

 12,000

Depreciation

 600

Given

 600

Miscellaneous

 200

Given

 220

EBIT

 10,200

 18,430

Interest

 -  

 -  

Earnings Before Taxes

 10,200

 18,430

Taxes

 5,100

 = 18,430 * 0.5

 9,215

Net Income

 5,100

 9,215

Dividends

 2,550

 = Net Income / 2

 4,608

To retained earnings

 2,550

 4,608

Exhibit 2

Balance Sheet (000s)

1995

1996

Assets

Cash & marketable securities

 $3,000

  = 125,000 * .02

 $2,500

Accounts receivable

 8,000

Average Collection Period (Average of last ones) /365 * New Sales

 10,388

Inventory

 11,500

  = 125,000 / 6.5

 19,231

Current Assets

 22,500

 32,119

Gross Fixed Assets

 24,000

  = 24,000 + 5,000 of new Plant and Equipment

 29,000

Accumulated Depreciation

 (4,000)

Given

 (4,600)

Net Fixed Assets

 20,000

 24,400

Total Assets

 42,500

 56,519

Liabilities and Equity

Notes Payable

 -  

 -  

Accounts Payable

 9,500

 = A P * 1.25 (Sales Growth)

 11,400

Accruals

 3,000

 = Accruals * 1.25 (Sales Growth)

 3,750

Current Liabilities

 12,500

 15,150

Bonds

 -  

 -  

Common Stock ($10 par)

 20,000

  = Common Stock 1995 * 1.25

 25,000

Retained Earnings

 10,000

  = Retained Earnings 1995 + 4,607.5

 14,608

Total Liabilities and Equity

 42,500

 54,758

 Check

 -  

-1,761