Hanson Ski Products Tables Answer

April-June 1986

July-Sept 1986

Cash

100

100

Receivables,net

507

4580

Inventories

2808

1690

Prepaid Expenses

241

294

Total current assets

3656

6664

Fixed Assets Plant, property, and equipment

3570

3808

Less Accumulated Depreciation

1398

1564

 Net fixed assets

2172

2244

Other Assets

201

247

Total Assets

6029

9155

Accounts Payable

1849

1717

Notes Payable - bank 

2176

3727

0

0

980

1060

Current Assets

1

Liabilities

Income tax payable

Current installment - long-term debt

Total current liability

5005

6504

Long Term Debt

-

-

Term Loan

-

-

5005

6504

Common Stock 

1249

1249

Additional capital

105

105

Retained Earnings

-330

1297

Total stockholder's Equity

1024

2651

Total L+OE

6029

9155

Total Liability

Stockholder's Equity

Notes payable calculated for each quarter of FY 1987 from Exhibit 4 is Quarter 1 Quarter 2 Notes payable—banks 2176 3727

The Notes Payable are less, therefore the company's plan is Feasible

2

Quarter

1 2 3 4

70% of Inventory 1965600 1183000 816200 1308300

For the First Quarter:70% of inventory = $1,965,600.

80% of Acct Receivables 507000 3664000 3791200 1392800

80% of (Account Receivable) $507,000 = $405,600. $1,965,600 + $405,600 = $2,371,200 > Notes Payable needed $2,176,000 Hence the company has sufficient amount of money for this quarter.

For the Second Quarter:70% of inventory $1,183,000. 80% of (Account Receivable) $3,664,000 $1,183,000 + $3,664,000 = $4,847,000 > Notes Payable needed $3,727,000. Hence the company has sufficient amount of money for this quarter.

For the Third Quarter:70% of inventory $816,200. 80% of (Account Receivable) $3,791,200 $816,200 + $3,791,200 = $4,607,400 > Notes Payable needed $3,041,000. Hence the company has sufficient amount of money for this quarter. For the Fourth Quarter:70% of inventory $1,308,300. 80% of (Account Receivable) $1,392,800 $1,308,300 + $1,392,800 = $2,701,100 > Notes Payable needed $1,650,000. Hence the company has sufficient amount of money for this quarter.

3

As per Balance Sheet Analysis, Account Receivables get Accumulated for Quarter 2 and Qu The current ratio for Quarter 1 is 1, Quarter 3 is >1 and Quarter 4 is >1. Company has almost the healthy current asset to manage current Liabilities. However, with high Account Receivables in few Quarters can cause cash crunch and force Quarter 1

Quarter 2

100 507

100 4580

2,808

1,690

241

294

Current Assets

Cash Receivables, net Inventories Prepaid expenses

Total current assets

3,656

6,664

Plant, property, and equipment

3570

3808

Less accumulated depreciation and amortization

1398

1564

Total net fixed assets

2172

2244

Other assets

201

247

Total Assets

6,029

9,155

1,849

1,717

Fixed Assets

Liabilities

Accounts payable Notes payable — banks

Income taxes payable

Current installments — long-term debt

Total current liabilities

2176

3727

0

0

980

1,060

5005

6504

Long-term debt

Term loan

0

Notes payable to banks

0

0

Total

0

0

0

1,249

1,249

Additional paid-in capital

105

105

Retained earnings (deficit)

-330

1297

Total stockholders' equity

1024

2651

Total Liabilities & Equities

6029

9155

Stockholders' Equity:

Common stock

4

Third Quarter FY 1987 Cash Budget by Months ($000)

Cash receipts Cash outflow For materials, labor, and operating expen Interest Capital expenditures Pay back stockholder loans

October $1,000

830 54 69 0

November $1,054

1,065 56 62 841

Collateral for bank loans at end of month Receivables Inventory Notes Payable

5,420 1,331 $3,680

Monthly distribution of 3rd quarter of FY 1987 using exhibit 5 931700 Oct 954100 Nov 816200 Dec

5,517 1,363 $4,650

4336000 4413600 3791200

The cash budget of November clearly shows that company will not be able to pay the stockh  because it exceeds the maximum limit of loan available. Hanson can distribute the stockholder's loan repayment to Sept, Oct and Nov in order to rep

Oct-Dec 1986

Jan-Mar 1987

100

100

4739

1741

1166

1869

198

283

6203

3993

3987

4288

1743

1938

2244

2350

283

302

8730

6645

1755

1664

3041

1650

0

0

207

189

5003

3503

-

-

-

-

5003

3503

1249

1249

105

105

2373

1788

3727

3142

8730

6645

Quarter 3 3041

Quarter 4 1650

Total Collateral 2472600 4847000 4607400 2701100

Notes Payable Needed Feasible 2176000 Yes 3727000 Yes 3041000 Yes 1650000 Yes

arter 3.

ompany to borrow. Quarter 3

Quarter 4

100 4739

100 1741

1,166

1,869

198

283

6,203

3,993

3987

4288

1743

1938

2244

2350

283

302

8,730

6,645

1,755

1,664

3041

1650

0

0

207

189

5003

3503

0

0

0

0

0

0

1,249

1,249

105

105

2373

1788

3727

3142

8730

6645

December $2,518

803 58 48 0

4,739 1,166 $3,041

5267700 5367700 4607400

3680000 Yes 4650000 No 3041000 Yes

older's loan on time using the bank loan.

ay it by November.