Company Financial Analysis
XYZ Construction Co, Inc.
from www.atlynx.com/SampleFinancialStatement.pdf
The following is a list of assumptions to be used in your analysis. Each part is to be considered independent when completing the calculations unless specified to go back to an earlier section. Please do the following:
1) Open the Excel document to perform your calculations. You will note there is a tab for each section listed below.
2) There is an additional tab labeled BS IS that was created by the accountants to estimate the green project. This is needed to complete the information for Part A: Ratios.
3) Once you have completed each part those spreadsheets will be embedded into your report using the template provided for the report. To embed the spreadsheets you can either copy and paste them in or display them on your screen and click print screen then paste them in as a picture.
Part A: Ratios
Calculate the percentage increase and decrease on the first tab. Then calculate the ratios given on this tab to use as a comparison of what will happen if XYZ decides to take on the green project.
Part B: Work Flow Schedule
The green project would take 6 months to complete. See the work flow schedule tab for additional details to complete and assume any cost that run over more than 1 month will be allocated evenly between the months listed.
Part C: Expenses
The estimated annual budget for other expenses (shown as part of General and Administrative Expenses on the Schedule of General and Administrative Expenses and Other Income Expense in the financial statements p. 15) will start with the same number but is expected to increase by 8% for traditional and 9% if XYZ takes on the green project
XYZ would also like to estimate their professional fees (shown on the Schedule of General and Administrative Expenses and Other Income Expense in the financial statements p 15) for year 5 if the inflation rate is 0.045. An additional $1,000 would be added to the current cost for professional fees shown if XYZ takes on the green project.
Part D: Payroll
XYZ would move up an existing employee who has been with the company over 3 year to a project manager position with a salary of $45,000 per year and a bonus of $1,000 if the job is completed on time and on budget. Applicable tax rates have been entered into the schedule. See payroll tab for additional details to complete. Be sure to review the notes to the financial statements for additional information.
Part E: Margins
Using the same increases in Contract Revenue and Contract Costs you calculated in Part A: Ratios, assume:
XYZ company has determined the following general and administrative expenses on the Schedule of General and Administrative Expenses and Other Income Expense in the financial statements p 15 to be fixed: Salaries and Benefits, Insurance, and Occupancy the other items listed on that statement have determined to be variable. The variable expenses will increase by 9% if the company takes on the green project.
XYZ would like to maintain a profit and overhead markup based on the Gross Profit Margin found in the Ratio’s tab in Part A for traditional and for green
This completes the part of the project that will be turned in with your written report.
Part F will be part of your Presentation the last week of class.
Part F: Interest and Investment
Calculate interest on the current amount used on the Line of Credit and add an additional $40,000 if XYZ takes on the green project. Assume this increase will remain outstanding until the current Line of Credit terms expire. The rate you need to research and see Note 6 in the financial statements for additional information on the time.
XYZ is considering investing $25,000 of its cash and would like to know which option would yield the highest return. The options are:
A-Invest $10,000 at 1.2%
B-Invest $20,000 at 1.85%
C-Invest $7,000 at 2.5%
The bank is currently paying 0.5% and all unused money from the investment will remain in the bank at that rate.
Include these calculations in your presentation and discuss XYZ’s financing and investment options in addition to the recommendation you highlighted in your written paper.
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