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The J C Cord Company

Income Statement
Particulars 2007 2008 2009 2010 2011
$(,000) $(,000) $(,000) $(,000) $(,000)
Revenue 3,139 4,186 4,579 4,486 3,605
COGS 2,134 2,909 3,005 3,060 2,458
Gross Profit 1,005 1,373 1,574 1,426 1,147
Operating expenses
Salary/wages/commissions 461 646 730 746 622
Payroll tax 24 55 43 72
Rent 82 98 113 139 149
Office 41 43 55 65
Advertising 36 65 89 74 89
Maintenance 26 24 24 14 10
Professional fees 29 22 29 19
Insurance 41 82 72 106
Utilities 10 24 26 5
Profit sharing 14 12 12 2
Telephone 12 17 17 19
Vehicle 17 29 17 14
All other 55 53 79 31 271
Total Operating expense 848 1170 1306 1306 1141
120 6
-266
12
EBITDA 157 203 268 -134 6
Depreciation 19 41 62 65 26
EBIT 138 162 206 -199 -20
Interest Expense 65 91 110 187 226
EBT 73 71 96 -386 -246
Tax 25.55 24.85 33.6 -135.1 -86.1
Net Income 47 46 62 -251 -160
The J C Cord Company
Balance Sheet
Particulars 2007 2008 2009 2010 2011
$(,000) $(,000) $(,000) $(,000) $(,000)

Cash 36.5 28.3 35 21.8 2


Accounts receivable 331.9 409.4 362.4 403.9 225
Inventory 526.6 619.4 627.1 788.2 628
Other 23 8.2 17.8 92.6 0
Total Current Assets 918 1065.3 1042.3 1306.5 856
257.8 275.3 266.4 231.1 665.167
21.1 17.5 16.3 502.1
Total assets 1,196.90 1,358.10 1,325.00 2,039.70 1,521.14
Accounts payable 252.5 411.4 282.2 470.6 528.318
Notes payable 397.9 366.2 465.6 1,186.30 970.102
Current portion 16.3 19.7 25 5
Other payables – taxes 38.9 33.8 6 190.6 135.694
Accrued expenses 86.6 79 50.6 70.6 75.182
Total Current Liabilities 792.2 910.1 829.4 1923.1 1709.296
Stockholder note 132 132 132 132 132
Note payable to other 84 84 84 84 84
Note payable to bank 45.6 42.7 18.5 2.4
Retirement benefits 15.4
Less: current portion -16.3 -19.7 -25 -2.4
Total Long Term Liabilities 260.7 239 209.5 216 216
Capital stock 96 96 96 96 96
Retained earnings (loss) 48 113 190.1 -195.4 -500.16
Total Equity 144 209 286.1 -99.4 -404.16
Total Liabilities & Equity 1,196.90 1,358.10 1,325.00 2,039.70 1,521.14
Shaw Supply Company
Income Statement

Particulars 2006 2007 2008 2009 2010 2011


$(,000) $(,000) $(,000) $(,000) $(,000) $(,000)

Revenue 19,214 19,829 24,245 23,834 15,650 15,593


COGS 14,018 14,983 17,534 18,096 11,398 11,323
Gross Profit 5,196 4,846 6,711 5,738 4,252 4,270
Operating Expense
Salary & wages 2,578 2,882 3,242 2,465 2,153
Payroll taxes & fringes 262 274 319 295 168
Insurance 341 485 430 190
Advertising 190 235 77 202 132
R.E. taxes/rent 259 252 178 293 307
Supplies 98 120 163 96
Delivery 206 331 338 134
Travel 106 118 86 72
Bad debt 120 341 269 65
Utilities 142 113 154 187
Telephone 89 79 72 58
Computer 43 19 26 17
Leases 106 211 262 122
Professional fees 43 55 48 60
Repair/maintenance 72 82 60 67 110
Collection 77 70 48 14
Other 101 214 353 62 1752
Total Operating Expense 4,833 5,881 6,125 7,270 4,399 4,622
214 -1,035 -296 -1,532 -147 -352
190 734 221 -806 7
EBITDA 404 -301 -75 -2,338 -140 -352
Depreciation 202 178 218 72 110
EBIT 202 -479 -293 -2,338 -212 -462
Interest Expense 101 408 655 367 374
EBT 101 -887 -948 -2,338 -579 -836
Tax 35 -310 -332 -818 -203 -293
Net Income 66 -577 -616 -1,520 -376 -543
Shaw Supply Company
Balance Sheet
2008 2009 2010 2011
Particulars $(,000) $(,000) $(,000) $(,000)

Cash 332.2 147.4 19.2 31.003


Accounts receivables 2,214.20 1,792.80 1,018.10 1,104.49
Other receivables 41.5 204.7 4.1
Inventory 4,719.40 3,091.90 1,882.30 1,708.46
Other 83.8 112.8 607.9 141.43
Total Current Assets 7,391.10 5,349.60 3,531.60 2,985.38
4,229.80 3,596.90 365.5 972.968
247.4 387.4 113.8
Total Assets 11,868.30 9,333.90 4,010.90 3,958.35

Notes payable 2,040.60 763.5 1,353.20 1923.979


Accounts payable 2,467.90 2,040.70 1,608.70 1,707.30
Accrued expenses 137.8 149 176.6 182.981
Taxes payable 70.3 75.4 12 38.726
Current portion 78.7 45.4
Deferred income & reserve 1,812.00
Total Current Liabilities 4,795.30 4,886.00 3,150.50 3,852.99
2,489.00 2,256.00 960 960
76.3 533
Total Long Term Liabilities 2,565.30 2,789.00 960.00 960.00
Capital stock 456 456 480 480
Retained earnings 4,051.70 1,682.90 -579.6 -1334.64
Total Equity 4,507.70 2,138.90 -99.60 -854.64
Total Liabilities & Equity 11,868.30 9,333.90 4,010.90 3,958.35
Z-Score - J C Cord

Year 2007 2008 2009 2010

X1 Current Assets 918 1065.3 1042.3 1306.5


Current Liabilities 792.2 910.1 829.4 1923.1
Working Capital 125.8 155.2 212.9 -616.6
Total Assets 1196.9 1358.1 1325 2039.7
Working Capital/Total Assets 0.1051048542 0.1142773 0.16067925 -0.302299
Weight 1.2 1.2 1.2 1.2
Total 0.126125825 0.1371328 0.19281509 -0.362759

X2 Retained Earnings 48 113 190.1 -195.4


Retained Earnings/Total Assets 0.040103601 0.0832045 0.1434717 -0.095798
Weight 1.4 1.4 1.4 1.4
Total 0.0561450414 0.1164863 0.20086038 -0.134118

X3 EBIT 138 162 206 -199


EBIT/Total Assets 0.1152978528 0.1192843 0.1554717 -0.097563
Weight 3.3 3.3 3.3 3.3
Total 0.3804829142 0.3936382 0.5130566 -0.321959

X4 Equity 144 209 286.1 -99.4


Total Debt 1052.9 1149.1 1038.9 2139.1
Equity/Total Debt 0.1367651249 0.1818815 0.27538743 -0.046468
Weight 0.7 0.7 0.7 0.7
Total 0.0957355874 0.127317 0.1927712 -0.032528

X5 Sales 3139 4186 4579 4486


Sales/Total Assets 2.622608405 3.0822473 3.45584906 2.199343
Weight 1 1 1 1
Total 2.622608405 3.0822473 3.45584906 2.199343

Altman Z SCORE 3.2810977731 3.8568215 4.55535233 1.3479792

Risk Distribution
Z > 2.9 Safe Zone
1.81 < Z < 2.99 Grey Zone
Z < 1.81 Distress Zone

Z Score - Shaw Supply Company


Z Score - Shaw Supply Company

Year 2008 2009 2010 2011

X1 Current Assets 7391.1 5349.6 3531.6 2985.383


Current Liabilities 4795.3 4886 3150.5 3852.99
Working Capital 2595.8 463.6 381.1 -867.607
Total Assets 11868.3 9333.9 4010.9 3958.351
Working Capital/Total Assets 0.2187170867 0.0496684 0.09501608 -0.219184
Weight 1.2 1.2 1.2 1.2
Total 0.262460504 0.0596021 0.1140193 -0.263021

X2 Retained Earnings 4051.7 1682.9 -579.6 -1334.64


Retained Earnings/Total Assets 0.3413884044 0.1802998 -0.1445062 -0.337171
Weight 1.4 1.4 1.4 1.4
Total 0.4779437662 0.2524197 -0.2023087 -0.472039

X3 EBIT -293 -2338 -212 -462


EBIT/Total Assets -0.0246876132 -0.250485 -0.052856 -0.116715
Weight 3.3 3.3 3.3 3.3
Total -0.0814691236 -0.8266 -0.1744247 -0.38516

X4 Equity 4507.7 2138.9 -99.6 -854.64


Total Debt 7360.6 7675 4110.5 4812.99
Equity/Total Debt 0.6124093145 0.278684 -0.0242306 -0.177569
Weight 0.7 0.7 0.7 0.7
Total 0.4286865201 0.1950788 -0.0169614 -0.124299

X5 Sales 24245 23834 15650 15593


Sales/Total Assets 2.0428368006 2.5534878 3.90186741 3.9392666
Weight 1 1 1 1
Total 2.0428368006 2.5534878 3.90186741 3.9392666

Altman Z SCORE 3.1304584672 2.2339886 3.62219187 2.6947479

Risk Distribution
Z > 2.9 Safe Zone
1.81 < Z < 2.99 Grey Zone
Z < 1.81 Distress Zone
2011

855.969
1709.296
-853.327
1521.136
-0.56098
1.2
-0.67318

-500.16
-0.32881
1.4
-0.46033

-20
-0.01315
3.3
-0.04339

-404.16
1925.296
-0.20992
0.7
-0.14694

3605
2.369939
1
2.369939

1.0461
The J C Cord Company
Ratio Analysis
Liquidity 2007 2008 2009 2010 2011
Current ratio 1.1588 1.1705 1.2567 0.6794 0.5008
Quick ratio 0.4941 0.4899 0.5006 0.2695 0.1332
NWC to Total asset 0.1051 0.1143 0.1607 -0.3023 -0.5610

Solvency Ratio 2007 2008 2009 2010 2011


Total Debt Ratio 0.8797 0.8461 0.7841 1.0487 1.2657
Debt-equity ratio 7.3118 5.4981 3.6312 -21.5201 -4.7637
Long term debt ratio 0.6442 0.5335 0.4227 1.8525 -1.1480
Equity multiplier 8.3118 6.4981 4.6312 -20.5201 -3.7637

Profitability 2007 2008 2009 2010 2011


Profit margin 0.0151 0.0110 0.0136 -0.0559 -0.0444
ROA 0.0396 0.0340 0.0471 -0.1230 -0.1051
ROE 0.3295 0.2208 0.2181 2.5241 0.3956

Effeciency 2007 2008 2009 2010 2011


Receivables turnover 9.4577 10.2247 12.6352 11.1067 16.0128
NWC turnover 24.9523 26.9716 21.5078 -7.2754 -4.2246
Fixed Asset turnover 11.2549 14.2964 16.1974 6.1184 5.4197
Total Asset turnover 2.6226 3.0822 3.4558 2.1993 2.3699

DuPont Analysis 2007 2008 2009 2010 2011


Profit Margin 0.0151 0.0110 0.0136 -0.0559 -0.0444
Total asset turnover 2.6226 3.0822 3.4558 2.1993 2.3699
Equity multiplier 8.3118 6.4981 4.6312 -20.5201 -3.7637
ROE 0.3295 0.2208 0.2181 2.5241 0.3956

Shaw Supply Company


Ratio Analysis
Liquidity 2008 2009 2010 2011
Current ratio 1.5413 1.0949 1.1210 0.7748
Quick ratio 0.5571 0.4621 0.5235 0.3314
NWC to Total asset 0.2187 0.0497 0.0950 -0.2192

Solvency Ratio 2008 2009 2010 2011


Total Debt Ratio 0.6202 0.7708 1.0248 1.2159
Debt-equity ratio 1.6329 3.5883 -41.2701 -5.6316
Long term debt ratio 0.5691 1.3039 -9.6386 -1.1233
Equity multiplier 2.6329 4.3639 -40.2701 -4.6316

Profitability 2008 2009 2010 2011


Profit margin -0.0254 -0.0638 -0.0240 -0.0348
ROA -0.0519 -0.1628 -0.0938 -0.1373
ROE -0.1367 -0.7105 3.7786 0.6358

Effeciency 2008 2009 2010 2011


Receivables turnover 10.9498 13.2943 15.3718 14.1178
NWC turnover 9.3401 51.4107 41.0653 -17.9724
Fixed Asset turnover 5.4152 5.9820 32.6518 16.0262
Total Asset turnover 2.0428 2.5535 3.9019 3.9393

DuPont Analysis 2008 2009 2010 2011


Profit Margin -0.0254 -0.0638 -0.0240 -0.0348
Total asset turnover 2.0428 2.5535 3.9019 3.9393
Equity multiplier 2.6329 4.3639 -40.2701 -4.6316
ROE -0.1367 -0.7105 3.7786 0.6358
The J C Cord Company
Business Risk Analysis

Sales Variability
Particulars 2007 2008 2009 2010 2011
Revenue 3,139 4,186 4,579 4,486 3,605
Standerd deviation of Revenue 613.0607637094
Mean Revenue 3,999
Revenue Variability (CV) 0.1533035168

Variability in EBIT
Particulars 2007 2008 2009 2010 2011
EBIT 138 162 206 -199 -20
Standerd deviation of EBIT 166.7717002372
Mean EBIT 57
Variability in EBIT (CV) 2.9054303177

Degree Of Operating Leverage


Year 2007 2008 2009 2010 2011
EBIT 138 162 206 -199 -20
Change of EBIT 24 44 -405 179
Revenue 3,139.00 4,186.00 4,579.00 4,486.00 3,605.00
Change of Revenue 1,047.00 393.00 -93.00 -881.00
Operating leverage 0.52 2.89 96.80 4.58

2008 2009 2010 2011


Degree Of Operating Leverage 0.52 2.89 96.80 4.58

Shaw Supply Company


Business Risk Analysis

Sales Variability
Particulars 2007 2008 2009 2010 2011
Revenue 19,829 24,245 23,834 15,650 15,593
Standerd deviation of Revenue 4211.5558526511
Mean Revenue 19,830
Revenue Variability (CV) 0.2123809065

Variability in EBIT
Particulars 2007 2008 2009 2010 2011
EBIT -479 -293 -2,338 -212 -462
Standerd deviation of EBIT 891.0935416666
Mean EBIT -757
Variability in EBIT (CV) -1.177449183

Degree Of Operating Leverage


Year 2007 2008 2009 2010 2011
EBIT -479 -293 -2,338 -212 -462
Change of EBIT 186 -2,045 2,126 -250
Revenue ### ### ### ### ###
Change of Revenue 4,416.00 -411.00 ### -57.00
Operating leverage -1.74 -411.72 2.65 -323.78

2008 2009 2010 2011


Degree Of Operating Leverage -1.74 -411.72 2.65 -323.78
The J C Cord Company
Financial Risk Analysis

Degree Of Financial Leverage


Particulars 2007 2008 2009 2010 2011
EBIT 138 162 206 -199 -20
Interest 65 91 110 187 226
DFL 1.890411 2.28169 2.145833 0.515544 0.081301

2007 2008 2009 2010 2011


Degree Of Financial Levera 1.890 2.282 2.146 0.516 0.081

Interest coverage ratio


Year 2007 2008 2009 2010 2011
EBIT 138 162 206 -199 -20
Interest 65 91 110 187 226
Interest coverage ratio (TIE) 2.123077 1.78022 1.872727 -1.064171 -0.088496

2007 2008 2009 2010 2011


Interest coverage ratio 2.123 1.780 1.873 -1.064 -0.088

Shaw Supply Company


Financial Risk Analysis

Degree Of Financial Leverage


Particulars 2007 2008 2009 2010 2011
EBIT -479 -293 -2,338 -212 -462
Interest 408 655 0 367 374
DFL 0.540023 0.309072 1 0.366149 0.552632

2007 2008 2009 2010 2011


Degree Of Financial Levera 0.540 0.309 1.000 0.366 0.553

Interest coverage ratio


Year 2007 2008 2009 2010 2011
EBIT -479 -293 -2,338 -212 -462
Interest 408 655 0 367 374
Interest coverage ratio (TIE) -1.17402 -0.447328 0 -0.577657 -1.235294

2007 2008 2009 2010 2011


Interest coverage ratio -1.174 -0.447 0.000 -0.578 -1.235
Country Risk Analysis

Political Risk Components Points USA


A Government Stability 12
Government Unity 4 3
Legislative Strength 4 2.5
Popular Support 4 3
B Socioeconomic Conditions 12
Unemployment 4 3
Consumer Confidence 4 3.5
Poverty 4 3
C Investment Profile 12
Contract Viability/Expropriation 4 2.5
Profits Repatriation 4 3
Payment Delays 4 3
D Internal Conflict 12
Civil War/Coup Threat 4 3.5
Terrorism/Political Violence 4 3
Civil Disorder 4 3.5
E External Conflict 12
War 4 4
Cross-Border Conflict 4 3
Foreign Pressures 4 3
F Corruption 6 5
G Military in Politics 6 3
H Religious Tensions 6 4
I Law and Order 6 5
J Ethnic Tensions 6 4
K Democratic Accountability 6 4
L Bureaucracy Quality 4 3
Total 100 74.5

Economic Risk components Points USA


Per capita income 5 3
Real GDP Growth 10 7.5
Annual Inflation Rate 10 7
Budget Balance as a Percentage of GDP 10 6.5
Current Account as a percentage of GDP 15 13
Total 50 37.0

Financial Risk Components Points USA


Foreign Debt as a Percentage of GDP 10 8
Exchange Rate Stability 10 7
Foreign debt services as a percentage of exports of Goods and servi 10 7.5
Current Account as a percentage of exports of goods and services 15 8.5
Net International Liquidity as a month of import cover 5 3.5
Total 50 34.5

USA
Composite risk 73.00
Low Risk

00.0 to 49.9 points Very High Risk


50.0 to 59.9 points High Risk
60.0 to 69.9 points Moderate Risk
70.0 to 79.9 points Low Risk
80.0 to 100 points Very Low Risk
The J C Cord Company
Income Statement
Growth Rate Calculation
Particulars 2007 2008 2009 2010 2011 Average Rate

Revenue 0.3335457 0.0938844 -0.02031 -0.196389 0.0526828038


COGS 0.6798343 0.6949355 0.6562568 0.6821222 0.6818308 0.6789959229
Gross Profit 0.3201657 0.3279981 0.3437432 0.3178778 0.3181692 0.3255907947
Operating expenses
Salary/wages/commissions 0.1468621 0.1543239 0.1594235 0.1662951 0.1725381 0.1598885463
Payroll tax 0.0076457 0.013139 0.0093907 0.0160499 0 0.0092450823
Rent 0.026123 0.0234114 0.0246779 0.0309853 0.0413315 0.0293057978
Office 0.0130615 0.0102723 0.0120114 0.0144895 0 0.00996694
Advertising 0.0114686 0.015528 0.0194366 0.0164958 0.0246879 0.0175233654
Maintenance 0.0082829 0.0057334 0.0052413 0.0031208 0.0027739 0.0050304708
Professional fees 0.0092386 0.0052556 0.0063333 0.0042354 0 0.0050125769
Insurance 0.0130615 0.0195891 0.015724 0.0236291 0 0.0144007233
Utilities 0.0031857 0.0057334 0.0056781 0.0011146 0 0.0031423599
Profit sharing 0.00446 0.0028667 0.0026207 0.0004458 0 0.0020786417
Telephone 0.0038229 0.0040612 0.0037126 0.0042354 0 0.003166406
Vehicle 0.0054157 0.0069279 0.0037126 0.0031208 0 0.0038354027
All other 0.0175215 0.0126613 0.0172527 0.0069104 0.0751734 0.0259038378
Total Operating expense 0.2701497 0.2795031 0.2852151 0.291128 0.3165049 0.2885001511

EBITDA 0.0500159 0.048495 0.0585281 -0.029871 0.0016644 0.0257665242


Depreciation 0.0060529 0.0097946 0.0135401 0.0144895 0.0072122 0.0102178478
EBIT 0.043963 0.0387004 0.044988 -0.04436 -0.005548 0.0155486764
Interest Expense
EBT 0.0232558 0.0169613 0.0209653 -0.086045 -0.068239 -0.018620329
Tax
Net Income 0.0151163 0.0110248 0.0136274 -0.05593 -0.044355 -0.012103214

The J C Cord Company


Working Capital Requirement
Growth Rate Calculation
Particulars 2007 2008 2009 2010 2011 Average Rate

Total Current Assets 918 1065.3 1042.3 1306.5 855.969


Total Current Liabilities 792.2 910.1 829.4 1923.1 1709.296
Net Working Capital 125.8 155.2 212.9 -616.6 -853.327
Change in NWC 29.4 57.7 -829.5 -236.727
Growth Rate in CNWC 0.962585 -15.37608 -0.714615 -5.042704328
Considered Rate

5.27%
70.00%
32.56%

15.99%
0.92%
2.93%
1.00%
1.75%
0.50%
0.50%
1.44%
0.31%
0.21%
0.32%
0.38%
2.59%
28.85%

3.50%
1%
1.55%

Considered Rate
3%
Shaw Supply Company
Income Statement
Growth Rate Calculation
Particulars 2006 2007 2008 2009 2010 2011

Revenue 0.032007911 0.22270412 -0.016951949 -0.34337501 -0.003642173


COGS 0.729572187 0.75561047 0.72320066 0.7592514895 0.728306709 0.726159174
Gross Profit 0.270427813 0.24438953 0.27679934 0.2407485105 0.271693291 0.273840826
Operating Expense
Salary & wages 0.134172999 0.14534268 0.13371829 0 0.157507987 0.1380747771
Payroll taxes & fringes 0.01363589 0.013818145 0.01315735 0 0.01884984 0.0107740653
Insurance 0.017747476 0.024459126 0.01773562 0 0.012140575 0
Advertising 0.009888623 0.011851329 0.00317591 0 0.012907348 0.008465337
R.E. taxes/rent 0.013479754 0.012708659 0.00734172 0 0.018722045 0.0196883217
Supplies 0.005100448 0.006051742 0.00672304 0 0.006134185 0
Delivery 0.010721349 0.016692723 0.01394102 0 0.0085623 0
Travel 0.005516811 0.00595088 0.00354712 0 0.004600639 0
Bad debt 0.006245446 0.017197035 0.01109507 0 0.004153355 0
Utilities 0.007390444 0.005698724 0.00635183 0 0.011948882 0
Telephone 0.004632039 0.003984064 0.00296968 0 0.00370607 0
Computer 0.002237951 0.000958193 0.00107239 0 0.001086262 0
Leases 0.005516811 0.01064098 0.01080635 0 0.007795527 0
Professional fees 0.002237951 0.002773715 0.00197979 0 0.003833866 0
Repair/maintenance 0.003747268 0.004135357 0.00247474 0 0.00428115 0.0070544475
Collection 0.004007495 0.003530183 0.00197979 0 0.000894569 0
Other 0.005256584 0.010792274 0.0145597 0 0.003961661 0.1123581094
Total Operating Expense 0.251535339 0.296585809 0.25262941 0.3050264328 0.281086262 0.296415058

EBITDA 0.021026335 -0.01517979 -0.0030934 -0.098095158 -0.00894569 -0.022574232


Depreciation 0.010513167 0.008976751 0.00899154 0 0.004600639 0.0070544475
EBIT 0.010513167 -0.02415654 -0.012085 -0.098095158 -0.01354633 -0.02962868
Interest Expense
EBT 0.005256584 -0.04473246 -0.0391008 -0.098095158 -0.03699681 -0.053613801
Tax
Net Income 0.003416779 -0.0290761 -0.0254155 -0.063761853 -0.02404792 -0.034848971

Shaw Supply Company


Working Capital Requirement
Growth Rate Calculation

Particulars 2006 2007 2008 2009 2010 2011

Total Current Assets 7,391.10 5,349.60 3,531.60 2,985.38


Total Current Liabilities 4,795.30 4,886.00 3,150.50 3,852.99
Net Working Capital 2,595.80 463.60 381.10 -867.61
Change in NWC -2,132.20 -82.50 -1,248.71
Growth Rate in CNWC -0.96130757 14.135842424
Average Rate Considered Rate

-0.0218514201 -1.50%
0.7370167815 70.00%
0.2629832185 26.30%

0.1181361226 12.00%
0.0117058822 1.17%
0.0120137987 1.20%
0.0077147583 0.77%
0.0119900833 1.20%
0.0040015685 0.40%
0.0083195651 0.83%
0.0032692421 0.33%
0.0064484844 0.64%
0.0052316459 0.52%
0.0025486429 0.25%
0.0008924653 0.09%
0.0057932783 0.58%
0.0018042204 0.18%
0.0036154933 0.36%
0.0017353393 0.17%
0.0244880552 2.45%
0.2805463847 28.05%

-0.0211436584 -2.11%
0.006689425 0.67%
-0.0278330834 3.50%
0.00%
-0.0445470815 -4.45%
0.00%
-0.0289556029 -2.90%

Average Rate Considered Rate


6.5872674273 3.00%
The J C Cord Company
Valuation Using DCF Method

Assumtions WACC Calculation


Partculars Rate Particulars Rate
Revenue Growth Rate 6% Risk free rate 6%
EBIT Growth Rate (% of Revenue) 1.55% Market Return 12%
Tax rate 30% Beta 1.3
Terminal Growth Rate 2% Cost of Equity 13.950%
Depreciation Growth Rate (% of Revenue) 1.00% Cost of Debt 9%
Capital Expenditure Growth Rate (% of Dep.) 15% Distress Premium 3.50%
CNWC Growth Rate (% of Revenue) 3% Adjusted Cost of Debt 13%
After tax cost of debt 0.0875
Weight of Equity 0.109589
Weight of Debt 0.890411
WACC 0.126589
Risk Premium 1.50%
Risk adjusted WACC 0.141589

Time factor 0 1 2 3
Particulars 2011 2012 2013 2014
Revenue 3,605 3821.3 4050.578 4293.6127
EBIT 59.23015 62.783959 66.550997
EBIT (1-Tc) 41.461105 43.9487713 46.585698
Add: Depreciation 26 38.213 40.50578 42.936127
Less: Change in NWC 114.639 121.51734 128.80838
Less: Capital Expenditure 5.73195 6.075867 6.440419
Free Cash Flow -40.69685 -43.1386557 -45.72698
Terminal Value
Total CF -40.69685 -43.1386557 -45.72698
PV of Total CF -35.6493 -33.1014505297 -30.7357

Enterprise Value -414.6131


Add: Cash & Cash Equivalents 2
Value of Firm (412)
J C Cord Company
on Using DCF Method

Capital Structure Debt classification of Shaw


Particulars Amount Particulars Amount
Debt 780 Notes payable to Weston 132
Equity 96 Notes payable to Weston's Wife 84
Total Capital 876 Twin City Bancorp 564
Total debt 780

4 5 6 7 8 9 10
2015 2016 2017 2018 2019 2020 2021
4551.2294 4824.303207 5113.7614 5420.5871 5745.8223086837 6090.5716472 6456.0059
70.544056 74.77669971 79.263302 84.0191 89.0602457846 94.403860532 100.06809
49.380839 52.3436898 55.484311 58.81337 62.3421720492 66.082702372 70.047665
45.512294 48.24303207 51.137614 54.205871 57.4582230868 60.905716472 64.560059
136.53688 144.7290962 153.41284 162.61761 172.3746692605 182.71714942 193.68018
6.8268442 7.236454811 7.6706421 8.1308806 8.618733463 9.1358574708 9.6840089
-48.47059 -51.37882916 -54.46156 -57.72925 -61.1930075875 -64.86458804 -68.75646
-576.7921
-48.47059 -51.37882916 -54.46156 -57.72925 -61.1930075875 -64.86458804 -645.5485
-28.53903 -26.49935163 -24.60545 -22.84691 -21.2140442637 -19.69788261 -171.724
The Shaw Supply Company
Valuation Using DCF Method

Assumtions WACC Calculation


Partculars Rate Particulars Rate
Revenue Growth Rate -1.50% Risk free rate 6%
EBIT Growth Rate ( % of Revenue) 3.50% Market Return 12%
Tax rate 30% Beta 1.3
Terminal Growth Rate 2% Cost of Equity 13.950%
Depreciation Growth Rate (% of Revenue) 1.00% Cost of Debt 9%
Capital Expenditure Growth Rate (% of Dep.) 15% Distress Premium 3%
CNWC Growth Rate (% of Revenue) 3% Adjusted Cost of Debt 12%
After tax cost of debt 0.084
Weight of Equity 0.241838
Weight of Debt 0.758162
WACC 0.1247158
Risk Premium 1.50%
Risk adjusted WACC 13.97%

Time Factor 0 1 2 3
Particulars 2011 2012 2013 2014
Revenue 15,593 15359.105 15128.718425 14901.788
EBIT 537.56868 529.505144875 521.56257
EBIT (1-Tc) 376.29807 370.6536014125 365.0938
Add: Depreciation 153.59105 151.28718425 149.01788
Less: Change in NWC 460.77315 453.86155275 447.05363
Less: Capital Expenditure 23.038658 22.6930776375 22.352681
Free Cash Flow 46.077315 45.386155275 44.705363
Terminal Value
Total CF 46.077315 45.386155275 44.705363
PV of Total CF 40.428775 34.9405893349 30.197422

Enterprise Value 321.24108


Add: Cash & Cash Equivalents 31
Value of Firm 352
ply Company
g DCF Method

Capital Structure Debt classification of Shaw


Particulars Amount Particulars Amount
Debt 1504.8 12 year Note payable to Mr. Shaw 960
Equity 480 Twin City Bancorp 544
Total Capital 1984.8 Total debt 1504

4 5 6 7 8 9 10
2015 2016 2017 2018 2019 2020 2021
14678.261 14458.08692 14241.216 14027.597 13817.1834225533 13609.926 13405.777
513.73913 506.0330422 498.44255 490.96591 483.6014197894 476.3474 469.20219
359.61739 354.2231296 348.90978 343.67614 338.5209938526 333.44318 328.44153
146.78261 144.5808692 142.41216 140.27597 138.1718342255 136.09926 134.05777
440.34783 433.7426076 427.23647 420.82792 414.5155026766 408.29777 402.1733
22.017391 21.68713038 21.361823 21.041396 20.7257751338 20.414889 20.108665
44.034783 43.37426076 42.723647 42.082792 41.4515502677 40.829777 40.21733
342.65872
44.034783 43.37426076 42.723647 42.082792 41.4515502677 40.829777 382.87605
26.098138 22.55532889 19.493455 16.847228 14.5602255491 12.583682 103.53623
The J C Cord Company and Shaw Supply Company
Liquidation Value Calculation
Base Case
Liquidation Value J C Cord Shaw Total Amount Percentage Liquidation
Amount
Cash 2.49 31.003 33.49 97% 32.49
Accounts receivables 225.13 1,104.49 1,329.62 75% 997.22
Inventories 628.35 1,708.46 2,336.80 58% 1,355.35
Other current assets 0.00 141.43 141.43 45% 63.64
Other assets 0.00 0 0.00 55% -
Net fixed assets 665.17 972.968 1,638.14 80% 1,310.51
Total Liquidation Value 1,521.14 3,958.35 5,479.49 3,759.21

Scenario Value Weight Weighted value

Best 4,269.64 0.15 640.45


Base 3,759.21 0.40 1,503.68
Worst 2,734.93 0.45 1,230.72
Weighted Average Value 1.00 3,374.85

Average liquidation value 3,374.85


Less: Transaction cost @ 15% 506.23
Less: Legal fees @ 18% 607.47
Liquidation value 2,261.15
Less: Long term debt 2,284.80
Equity Value (23.65)
y Company
on
Best Case Worst Case
Percentage Liquidation Liquidation
Percentage
Amount Amount
100% 33.49 95% 31.82
85% 1,130.18 58% 771.18
70% 1,635.76 42% 981.46
55% 77.79 35% 49.50
58% - 35% -
85% 1,392.41 55% 900.97
4,269.64 2,734.93
Combined Value of J.C. Cord & Shaw

Assumtions WACC Calculation


Particulars Rates Particulars Rate
Revenue Growth Rate 5% Risk free rat 5%
Cost of Good Sold (% of Revenue) 60% Market Retu 9%
Operational Expense (% of Revenue) 20% Beta 1.1
Terminal Growth Rate 3% Cost of Equi 9.800%
Tax Rate 30% Cost of Deb 9%
Depreciation Growth Rate (% of Revenue) 4% Distress Pr 3.50%
Capital Expenditure Growth Rate (% of Dep.) 65% Adjusted Co 12%
CNWC Growth Rate (% of Revenue) 3% After tax co 0.07475
Weight of E 0.109589
Weight of D 0.890411
WACC 0.113137
Risk Premi 1.50%
Risk adjust 0.128137

Time Factor 0 1 2 3
2011 2012 2013 2014
Revenue 19,198 20157.9 21165.795 22224.08475
Cost of Good Sold 12094.74 12699.477 13334.45085
Gross Profit 8063.16 8466.318 8889.6339
Operational Expense 4031.58 4233.159 4444.81695
EBIT 4031.58 4233.159 4444.81695
EBIT (1-Tc) 2822.106 2963.2113 3111.371865
Add: Depreciation 806.316 846.6318 888.96339
Less: Change in NWC 604.737 634.97385 666.7225425
Less: Capital Expenditure 524.1054 550.31067 577.8262035
Free Cash Flow 2499.5796 2624.5586 2755.786509
Terminal Value
Total CF 2499.5796 2624.5586 2755.786509
PV of Total CF 2215.6702599 2062.2086 1919.3759118082

Enterprise Value 27925.432


Add: Cash & Cash Equivalents 33
Value of Firm 27,959
Less: Long Term debt 2264
Value of Equity 25,695
.C. Cord & Shaw

Capital Structure Debt classification of Cord-Shaw


Particulars Amount Particulars Amount
Debt 2264 Notes payable to Weston 132
Equity 576 Notes payable to Weston's 84
Total Capita 2840 Twin City Bancorp 544
Total debt of Cord 760
Total Equity of Cord 96
12 year Note payable to M 960
Twin City Bancorp 544
Total debt of Shaw 1504
Total Equity of Shaw 480
Total Debt of Cord-Shaw 2264
Total Equity of Cord-Shaw 576

4 5 6 7 8 9 10
2015 2016 2017 2018 2019 2020 2021
23335.289 24502.053 25727.156 27013.514 28364.1896098624 29782.39909 31271.519
14001.173 14701.232 15436.294 16208.108 17018.5137659175 17869.43945 18762.911
9334.1156 9800.8214 10290.862 10805.406 11345.675843945 11912.95964 12508.608
4667.0578 4900.4107 5145.4312 5402.7028 5672.8379219725 5956.479818 6254.3038
4667.0578 4900.4107 5145.4312 5402.7028 5672.8379219725 5956.479818 6254.3038
3266.9405 3430.2875 3601.8019 3781.8919 3970.9865453807 4169.535873 4378.0127
933.41156 980.08214 1029.0862 1080.5406 1134.5675843945 1191.295964 1250.8608
700.05867 735.0616 771.81468 810.40542 850.9256882959 893.4719727 938.14557
606.71751 637.05339 668.90606 702.35136 737.4689298564 774.3423763 813.0595
2893.5758 3038.2546 3190.1674 3349.6757 3517.1595116229 3693.017487 3877.6684
38537.189
2893.5758 3038.2546 3190.1674 3349.6757 3517.1595116229 3693.017487 42414.857
1786.4361 1662.704 1547.5419 1440.3561 1340.5941485147 1247.741946 12702.803
If Liquidate the businesss
Net Proceeds from Liquidation 2,261.15
Long Term Debt 2,284.80
Value of Equity (23.65)

If go for restructuring
Value of Firm 27958.92641696
Less: Long Term debt 2264
Value of Equity 25694.92641696

go for operation restructing of Cord-Shaw