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any one do my finance test? here is example test
Project – Phase 1 – To Do
| FNCE 390 – Project – Phase 1 | ||||||||||||
| GREENGO LTD. | ||||||||||||
| Formation of Business | ||||||||||||
| I | Introduction | |||||||||||
| For several years now you have been working with three “boot-strap” business operations involved in | ||||||||||||
| the manufacture of agricultural crop nutrients. As a “hopeful my big day” business investor you have recently joined | ||||||||||||
| a boutique venture capital firm. You believe your time has come and have convinced the venture firm | ||||||||||||
| partners that there is unlimited potential if these three businesses are combined (your fellow school mates). | ||||||||||||
| You have also convinced your school mates that there are many potential benefits by combining the three operations | ||||||||||||
| and gaining access to your firms venture capital funding. Believing you, they have asked you to “make it happen “ | ||||||||||||
| and complete the combination. Your documented project plan and implementation steps are outlined below: | ||||||||||||
| The business’s will combine effective February 1, 2022 into a single incorporated entity. You will create a | ||||||||||||
| February 1, 2022 Opening Balance sheet reflecting the closing of the business combination transaction. | ||||||||||||
| The businesses will then transition operations from “as is” to an integrated entity over the next year. | ||||||||||||
| You will develop the forecast income statement for the first year of operations using the assumptions provided for the | ||||||||||||
| year ended January 31, 2023 as well as the January 31, 2023 Balance Sheet. You are doing this as you | ||||||||||||
| believe it will take one year to establish operations before heading down the growth plan you have in mind. Financial | ||||||||||||
| performance for the first year is based on 2022 combined results of the individual businesses with certain adjustments | ||||||||||||
| you expect to see from the formation of the new company. | ||||||||||||
| II | Project Plan | |||||||||||
| A | Combination process – Entries for Column H | |||||||||||
| 1 | Complete the column “Combined As Is” Balance Sheet by adding the respective balances of the individual entities. | ` | ||||||||||
| Column H reflects the totals of columns B-D-F | ||||||||||||
| 2 | Complete the column “Combined As Is” Income Statement by adding the respective balances of the individual entities. | |||||||||||
| Column H reflects the totals of columns B-D-F | ||||||||||||
| 3 | Review the “Combined As Is” Ratios (each entity has formulas to work with) | |||||||||||
| Test check accuracy of ratios in Column H | ||||||||||||
| B | Incorporation process – revaluation adjustments reflect in Column J – new Balance column K | |||||||||||
| 1 | The incorporation process has been structured such that an incorporated entity created by your firm will acquire | |||||||||||
| the operations of each entity. As such all assets are revalued to their fair market values at the time of | ||||||||||||
| acquisition. The fair market values are: | ||||||||||||
| Cash | All cash balances of original operations paid to founders – Combined cash = $0 | |||||||||||
| Opening Balance Sheet cash = $0 | ||||||||||||
| Accounts receivable | Accounts receivable are revalued at 7% higheras no allowance for doubtfuls | |||||||||||
| Inventory | Inventory is revalued at 9% lower due to obsolete raw materials | |||||||||||
| Prepaid expenses | Transfer $105,000 to Inventory as goods received day of transaction. | |||||||||||
| Deferred revenue | Reduce by 20% to reflect work completed – record change to venture capital | |||||||||||
| short term loan as is considered a purchase adjustment | ||||||||||||
| Land | combined revised market value per appraisal | 2,010,000 | ||||||||||
| Building | combined revised market value of | 2,450,000 | ||||||||||
| Equipment | increase combined market value to | 975,000 | ||||||||||
| Vehicles | revised market value | 380,000 | ||||||||||
| Accumulated depreciation | Adjusted all historical balances to a zero balance as assets are revalued | |||||||||||
| and reflect a new starting value | ||||||||||||
| Goodwill and intangibles | Add $330,000 for goodwill | |||||||||||
| Accounts payable | Due diligence discovered an additional $280,000 in payables | |||||||||||
| Income taxes payable | Nones | |||||||||||
| Deferred tax liability | Add $415,000 for tax effect of transaction as deferred tax liability | |||||||||||
| Term loan | No change | |||||||||||
| Mortgage | No change | |||||||||||
| Current portion of debt | No change | |||||||||||
| Due to relatives | Convert 20% of balance to share capital – repay 80% using venture capital | |||||||||||
| short term loan | ||||||||||||
| Proprietorship capital | Convert full balances to share capital | |||||||||||
| Partnership capital | Convert full balances to share capital | |||||||||||
| Share capital | Proprietor + Partnership capital + 30% of due from relatives converted | |||||||||||
| Retained Earnings | None as the start-up of new legal entity | |||||||||||
| Venture capital loan | Balancing figure of all other balance sheet balances and adjustments | |||||||||||
| C | 2022-2023 Operations – Operational Changes – reflect in 2022-2023 adjustments column (Column P) | |||||||||||
| 1 | Revenues will increase by $7,200,000 | |||||||||||
| 2 | Gross profit will be 29% based on 2022-2023 pro forma ending revenues | |||||||||||
| 3 | Selling costs will increase by 11% of incremental sales | |||||||||||
| 4 | Administrating costs will increase by 8% of incremental cost of sales | |||||||||||
| 5 | Amortization will increase by $180,000 per annum (in addition to historical) | |||||||||||
| 6 | Interest expense will increase based on venture capital short term loan balance at 9% interest rate | |||||||||||
| 7 | Income taxes will be 24% of combined incomes as now an incorporated entity – split as | |||||||||||
| follows – 25% deferred – 75% current – adjust balance sheet accounts for these amounts | ||||||||||||
| 8 | Adjust final accounts receivable balances to reflect a 45 day collection cycle – difference to cash (use 360 days) | |||||||||||
| 9 | Adjust final inventory balances to reflect 57 days on hand – difference to cash (use 360 days) | |||||||||||
| 10 | Adjust final accounts payable balances to reflect a turnover ratio of 72 days – difference to cash (use 360 days) | |||||||||||
| 11 | Acquired new formulation equipment for $154,000 and financed 100% with a new term loan at end of year. | |||||||||||
| Term loan is repayable over five years and life of equipment will be 10 years. | ||||||||||||
| D | Balance Sheet Steps – balancing everything | |||||||||||
| 1 | Columns B through to L will balance at the Balance Sheet level – ignore income statement effects. | |||||||||||
| 2 | Columns N & P must reflect the income statement changes and will balance by recording the balance amount in cash | |||||||||||
| If you leave cash blank – the figure reflected in line 57 * -1 should work. Once cash adjusted – line 57 = 0 | ||||||||||||
| 3 | Column R will balance if 1 and 2 above are balanced | |||||||||||
| E | Your Management Report | |||||||||||
| Upon completion you are to prepare a brief report and include as an Appendix your completed Template | ||||||||||||
| Your report should address the following: | ||||||||||||
| 1) describe 3 benefits of incorporation into a larger entity | ||||||||||||
| 2) 3 areas of financial improvement you want to address going forward based on ratio analysis | ||||||||||||
| 3) identify 3 potential conflicts that could arise between management and your venture capital | ||||||||||||
| firm | ||||||||||||
| 4) considering your growth plans – what senior management positions would you consider | ||||||||||||
| necessary to ensure credibility in the financial community? Maximun size is 6 members. | ||||||||||||
| 5) Build the Year 1 cash flow statement to support the change in cash for Year 1 | ||||||||||||
| statement section and add as Appendix | ||||||||||||
| 6) Should dividends be considered at this time. | ||||||||||||
| Maximum Report length is 2 pages plus Appendices | ||||||||||||
| F | Project Responsibility | |||||||||||
| As you develop the project you are required to report to the Venture Capital Senior Manager to ensure work | ||||||||||||
| is progressing correctly. You are encouraged to ask for assistance at any time – email with questions | ||||||||||||
| and proposed solutions. DO NOT LEAVE THIS TO LAST MOMENT. Good practice for mid-term preparation. | ||||||||||||
| Each column must balance at the balance sheet level. Working on a column by column basis will | ||||||||||||
| be most effective with the respective columns cross adding. | ||||||||||||
| If a formula exists in a cell – do not alter it. If unsure of what to do – contact the Senior Manager. | ||||||||||||
| The cells with | require work by you. | |||||||||||
GREENGO Template
| GREENGO LTD. | Owner: Mary Oilseed | Partners: Helen Lamb (75%) + Heather Legg (25%) | Shareholder: Nicolas Gold | Balance Sheet Opening | As Is = Combined + Corporate Tax Effect | Operational Changes Including Corporate Tax | Forecast Results | |||||||||||
| Start-up Balance Sheets | Canola Grow (proprietorship) | Sugar Sap (partnership) | BannerCrop Inc. | Combined | Revaluation | GREENGO LTD. | First Year Feb 1 2022 – Jan 31 2023 | Adjustments | GREENGO LTD. | |||||||||
| January 31 2022 | February 1 | February 1 | ||||||||||||||||
| 2022 | 2022 | 2021 | As Is | Adjustments | Opening | Operations | 2022-2023 | Jan 31 2023 | ||||||||||
| Assets | ||||||||||||||||||
| Current assets | ||||||||||||||||||
| Cash | $ 65,000 | $ 75,000 | $ 35,000 | $ 175,000 | $ (175,000) | $ – 0 | $ 1,046,400.00 | $ 1,046,400 | Balancing Figure | |||||||||
| Accounts receivable | 1,375,000 | 1,200,000 | 1,080,000 | $ 3,655,000 | 255,850 | 3,910,850 | 238,080,000 | 241,990,850 | ||||||||||
| Inventory | 1,115,000 | 1,350,000 | 900,000 | $ 3,365,000 | (269,200) | 3,095,800 | 1,904,640,000 | 1,907,735,800 | ||||||||||
| Prepaid expenses | 55,000 | 105,000 | 60,000 | $ 220,000 | 325,000 | 545,000 | 545,000 | |||||||||||
| 2,610,000 | 2,730,000 | 2,075,000 | 7,415,000 | 136,650 | 7,551,650 | 1,046,400 | 2,142,720,000 | 2,151,318,050 | ||||||||||
| Property, plant and equipment | ||||||||||||||||||
| Land | 610,000 | 500,000 | 525,000 | 1,635,000 | 375,000 | 2,010,000 | 2,010,000 | |||||||||||
| Buildings | 250,000 | 700,000 | 600,000 | 1,550,000 | 900,000 | 2,450,000 | 2,450,000 | |||||||||||
| Equipment | 160,000 | 550,000 | 130,000 | 840,000 | 135,000 | 975,000 | 154,000 | 1,129,000 | ||||||||||
| Vehicles | 80,000 | 200,000 | 90,000 | 370,000 | 10,000 | 380,000 | 380,000 | |||||||||||
| 1,100,000 | 1,950,000 | 1,345,000 | 4,395,000 | 1,420,000 | 5,815,000 | – 0 | 154,000 | 5,969,000 | ||||||||||
| Less: Accumulated amortization | ||||||||||||||||||
| Accumulated amortization – Buildings | – 0 | (150,000) | (200,000) | (350,000) | – 0 | (350,000) | (280,092) | (115,900) | (745,992) | |||||||||
| Accumulated amortization – Equipment | (40,000) | (85,000) | (80,000) | (205,000) | – 0 | (205,000) | (111,465) | (46,124) | (362,589) | |||||||||
| Accumulated amortization – Vehicles | (80,000) | (100,000) | (80,000) | (260,000) | – 0 | (260,000) | (43,443) | (17,977) | (321,420) | |||||||||
| (120,000) | (335,000) | (360,000) | (815,000) | – 0 | (815,000) | (435,000) | (180,000) | (1,430,001) | ||||||||||
| 980,000 | 1,615,000 | 985,000 | 3,580,000 | 1,420,000 | 5,000,000 | (435,000) | (26,000) | 4,538,999 | ||||||||||
| Goodwill and other intangibles | – 0 | – 0 | – 0 | – 0 | 330,000 | 330,000 | 330,000 | |||||||||||
| $ 3,590,000 | $ 4,345,000 | $ 3,060,000 | $ 10,995,000 | $ 1,886,650 | $ 12,881,650 | $ 611,400 | $ 2,142,694,000 | $ 2,156,187,049 | ||||||||||
| Liabilities and Shareholders’ Equity | ||||||||||||||||||
| Current liabilities | ||||||||||||||||||
| Accounts payable | $ 2,090,000 | $ 1,515,000 | $ 1,909,900 | $ 5,514,900 | $ 280,000 | $ 5,794,900 | $ 1,390,776 | $ 7,185,676 | $ 14,371,352 | |||||||||
| Deferred revenue | 125,000 | 130,000 | 210,000 | $ 465,000 | (93,000) | 372,000 | 372,000 | |||||||||||
| Income taxes payable | – 0 | – 0 | – 0 | $ – 0 | – 0 | – 0 | 2,350,393 | 5,845,230 | 8,195,624 | |||||||||
| Venture short term loan – due on demand | – 0 | – 0 | – 0 | $ – 0 | 2,676,650 | 2,676,650 | 2,676,650 | |||||||||||
| Current portion of long term debt | 100,000 | 45,000 | 50,000 | $ 195,000 | – 0 | 195,000 | 195,000 | |||||||||||
| 2,315,000 | 1,690,000 | 2,169,900 | 6,174,900 | 2,863,650 | 9,038,550 | 3,741,169 | 13,030,906 | 25,810,626 | ||||||||||
| – | ||||||||||||||||||
| Term loan payable | 400,000 | 400,000 | – 0 | 800,000 | – 0 | 800,000 | 800,000 | |||||||||||
| Refinance term loan | – 0 | – 0 | – 0 | – 0 | – 0 | – 0 | – 0 | |||||||||||
| Mortgage payable | – 0 | 650,000 | 500,000 | 1,150,000 | – 0 | 1,150,000 | 1,150,000 | |||||||||||
| Due to Relatives | 300,000 | 1,000,000 | 440,000 | 1,740,000 | (2,141,300) | (401,300) | – 401,300 | |||||||||||
| 700,000 | 2,050,000 | 940,000 | 3,690,000 | (2,141,300) | 1,548,700 | – 0 | – 0 | 1,548,700 | ||||||||||
| Less: portion due within one year | (100,000) | (45,000) | (50,000) | (195,000) | – | (195,000) | – | – | (195,000) | |||||||||
| 600,000 | 2,005,000 | 890,000 | 3,495,000 | (2,141,300) | 1,353,700 | – 0 | – 0 | 1,353,700 | ||||||||||
| Deferred income taxes | – 0 | – 0 | – 0 | – | 415,000 | 415,000 | 2,350,393 | 1,948,410 | 4,713,804 | |||||||||
| 2,915,000 | 3,695,000 | 3,059,900 | 9,669,900 | 1,137,350 | 10,807,250 | 6,091,563 | 14,979,316 | 31,878,129 | ||||||||||
| Shareholders’ Equity | ||||||||||||||||||
| Proprietorship Capital | 675,000 | – 0 | – 0 | 675,000 | 675,000 | 1,350,000 | 1,350,000 | |||||||||||
| Partnership Capital | – 0 | 650,000 | – 0 | 650,000 | 650,000 | 1,300,000 | 1,300,000 | |||||||||||
| Share capital | – 0 | – 0 | 100 | 100 | 682,610 | 682,710 | 682,710 | |||||||||||
| Retained earnings | – 0 | – 0 | – 0 | – 0 | – 0 | 10,341,731 | 24,679,861 | 35,021,592 | ||||||||||
| 675,000 | 650,000 | 100 | 1,325,100 | 2,007,610 | 3,332,710 | 10,341,731 | 24,679,861 | 38,354,302 | ||||||||||
| 3,590,000 | 4,345,000 | 3,060,000 | 10,995,000 | 3,144,960 | 14,139,960 | 16,433,294 | 39,659,178 | 70,232,432 | ||||||||||
| – 0 | – 0 | – 0 | – 0 | (1,258,310) | (1,258,310) | (15,821,894.61) | 2,103,034,822.10 | 2,085,954,617 | ||||||||||
| GREENGO LTD. | AS IS | |||||||||||||||||
| Income Statement | Canola Grow (proprietorship) | Sugar Sap (partnership) | BannerCrop Inc. | Combined | First Year | Operating Adjustments | GREENGO LTD. | |||||||||||
| Year Ended January 31 | 2022 | 2022 | 2022 | As Is | Operations | 2022-2023 | Jan 31 2023 | |||||||||||
| Revenues | $ 7,750,000 | $ 14,560,000 | $ 7,450,000 | $ 29,760,000 | $ 29,760,000 | $ 36,960,000 | $ 66,720,000 | |||||||||||
| $ – 0 | ||||||||||||||||||
| Cost of goods sold | 5,618,750 | 10,192,000 | 5,587,500 | $ 21,398,250 | 8,630,400 | 8,630,400 | ||||||||||||
| Gross profit | 2,131,250 | 4,368,000 | 1,862,500 | 8,361,750 | 21,129,600 | 36,960,000 | 58,089,600 | |||||||||||
| 27.5% | 30.0% | 25.0% | 28.10% | 71.00% | 100.00% | 87.06% | ||||||||||||
| Expenses | ||||||||||||||||||
| Selling | 685,000 | 2,680,000 | 995,000 | 4,360,000 | 4,839,600 | 4,065,600 | 8,905,200 | |||||||||||
| Administrative | 815,000 | 877,000 | 675,000 | 2,367,000 | 2,556,360 | – | 2,556,360 | |||||||||||
| Amortization | 60,000 | 125,000 | 70,000 | 255,000 | 435,000 | 180,000 | 180,000 | 615,000 | ||||||||||
| Interest | 4,750 | 25,000 | 97,500 | 127,250 | 240,899 | 240,899 | 481,797 | |||||||||||
| 1,564,750 | 3,707,000 | 1,837,500 | 7,109,250 | 8,071,859 | 4,486,499 | 12,558,357 | ||||||||||||
| Income before income taxes | 566,500 | 661,000 | 25,000 | 1,252,500 | 13,057,742 | 32,473,502 | 45,531,243 | |||||||||||
| Income tax expense | ||||||||||||||||||
| – current | 225,450 | 2,350,393 | 5,845,230 | 8,195,624 | ||||||||||||||
| – deferred | 225,450 | 2,350,393 | 1,948,410 | 4,298,804 | ||||||||||||||
| Income tax expense | – 0 | – 0 | – 0 | 450,900 | 4,700,787 | 7,793,640 | 12,494,427 | |||||||||||
| Net income | $ – 0 | $ – 0 | $ 25,000 | $ 801,600 | $ 8,356,955 | $ 24,679,861 | $ 33,036,816 | |||||||||||
| Retained earnings, beginning | – 0 | – 0 | (25,000) | – 0 | 3,656,168 | – 0 | – 0 | |||||||||||
| Less: Dividends | – 0 | – 0 | – 0 | – 0 | (1,671,391) | – 0 | – 0 | |||||||||||
| Retained earnings, ending | $ – 0 | $ – 0 | $ – 0 | $ – 0 | $ 10,341,731 | $ 24,679,861 | $ 33,036,816 | |||||||||||
| AS IS | ||||||||||||||||||
| GREENGO LTD. | Canola Grow (proprietorship) | Sugar Sap (partnership) | BannerCrop Inc. | Combined | First Year | Operating Adjustments | GREENGO LTD. | |||||||||||
| Ratios | 2022 | 2022 | 2022 | As Is | Operations | 2022-2023 | Jan 31 2023 | |||||||||||
| Quick Ratio (General Benchmark: 1:1) | ||||||||||||||||||
| Textbook Definition | ||||||||||||||||||
| Current Assets – Inventory (A) | 1,495,000 | 1,380,000 | 1,175,000 | 4,050,000 | 243,582,250 | |||||||||||||
| Current liabilities (B) | 2,315,000 | 1,690,000 | 2,169,900 | 6,174,900 | 25,810,626 | |||||||||||||
| Quick Working capital (A-B) | (820,000) | (310,000) | (994,900) | (2,124,900) | 217,771,624 | |||||||||||||
| Quick Ratio (A/B) | 0.65 | 0.82 | 0.54 | 0.66 | 9.44 | |||||||||||||
| Current Ratio (General Benchmark: 2:1) | ||||||||||||||||||
| Current assets | 2,610,000 | 2,730,000 | 2,075,000 | 7,415,000 | 2,151,318,050 | |||||||||||||
| Current liabilities | 2,315,000 | 1,690,000 | 2,169,900 | 6,174,900 | 25,810,626 | |||||||||||||
| Working capital | 295,000 | 1,040,000 | (94,900) | 1,240,100 | 2,125,507,424 | |||||||||||||
| Current ratio | 1.13 | 1.62 | 0.96 | 1.20 | 83.35 | |||||||||||||
| Debt / Equity | ||||||||||||||||||
| Total Assets | 3,590,000 | 4,345,000 | 3,060,000 | 10,995,000 | 2,156,187,049 | |||||||||||||
| Current + Long-term Debt | 2,915,000 | 3,695,000 | 3,059,900 | 9,669,900 | 31,878,129 | |||||||||||||
| Proprietor / Partner / Shareholder Equity | 675,000 | 650,000 | 100 | 1,325,100 | 38,354,302 | |||||||||||||
| Current + Long-term Debt / Shareholders Equity | 4.32 | 5.68 | 30,599.00 | 7.30 | 0.83 | |||||||||||||
| Current + Long-term Debt as a % of Total Assets (General Range – 40% – 60%) | 81.2% | 85.0% | 100.0% | 87.9% | 1.5% | |||||||||||||
| Total Equity as a % of Total Assets (General Range – 60% – 40%) | 18.8% | 15.0% | 0.0% | 12.1% | 1.8% | |||||||||||||
| Long-term Debt % of Non-current Assets (General Limit: up to 80%) | ||||||||||||||||||
| Long-term Debt | 700,000 | 2,050,000 | 940,000 | 3,690,000 | 1,548,700 | |||||||||||||
| Non-current assets | 980,000 | 1,615,000 | 985,000 | 3,580,000 | 4,868,999 | |||||||||||||
| 71.4% | 126.9% | 95.4% | 103.1% | 31.8% | ||||||||||||||
| AS IS | ||||||||||||||||||
| GREENGO LTD. | Canola Grow (proprietorship) | Sugar Sap (partnership) | BannerCrop Inc. | Combined | Revaluation | First Year | Operating Adjustments | GREENGO LTD. | ||||||||||
| Ratios | 2022 | 2022 | 2022 | As Is | Adjustments | Operations | 2022-2023 | Jan 31 2023 | ||||||||||
| Accounts Receivable Turnover | ||||||||||||||||||
| Benchmark Based on Customer Base Credit + Selling Terms + Payment Methods | ||||||||||||||||||
| Ending Accounts Receivable Basis | ||||||||||||||||||
| Revenue | 7,750,000 | 14,560,000 | 7,450,000 | 29,760,000 | 66,720,000 | |||||||||||||
| Ending Accounts Receivable | 1,375,000 | 1,200,000 | 1,080,000 | 3,655,000 | 241,990,850 | |||||||||||||
| Turnover Ratio | 6 | 12 | 7 | 8 | 0.28 | |||||||||||||
| Days Outstanding (365 / Turnover Ratio) | 64 | 30 | 52 | 44 | 1,306 | |||||||||||||
| Inventory Turnover | ||||||||||||||||||
| Benchmark Based on Inventory Purchasing Practices + Inventory Stock Limits + Sales Objectives | ||||||||||||||||||
| Ending Inventory Basis | ||||||||||||||||||
| Cost sales | 5,618,750 | 10,192,000 | 5,587,500 | 21,398,250 | 8,630,400 | |||||||||||||
| Ending Inventory | 1,115,000 | 1,350,000 | 900,000 | 3,365,000 | 1,907,735,800 | |||||||||||||
| Turnover Ratio | 5 | 8 | 6 | 6 | 0.00 | |||||||||||||
| Days On Hand (365 / Turnover Ratio) | 71 | 48 | 58 | 57 | 79,577.41 | |||||||||||||
| Accounts Payable Turnover | ||||||||||||||||||
| Benchmark Based on Purchasing Practices + Financial Policies | ||||||||||||||||||
| Ending Accounts Payable Basis | ||||||||||||||||||
| Cost sales | 5,618,750 | 10,192,000 | 5,587,500 | 21,398,250 | 8,630,400 | |||||||||||||
| Ending Accounts Payable | 2,090,000 | 1,515,000 | 1,909,900 | 5,514,900 | 14,371,352 | |||||||||||||
| Turnover Ratio | 3 | 7 | 3 | 4 | 0.60 | |||||||||||||
| Days To Pay (365 / Turnover Ratio) | 134 | 54 | 123 | 93 | 599 | |||||||||||||
| Property, Plant, Equipment (“PPE”) Turnover | ||||||||||||||||||
| Benchmark Based on Production or Sales Objectives | ||||||||||||||||||
| Ending PPE Basis | ||||||||||||||||||
| Revenue | 7,750,000 | 14,560,000 | 7,450,000 | 29,760,000 | 66,720,000 | |||||||||||||
| Ending Property, plant, equipment | 980,000 | 1,615,000 | 985,000 | 3,580,000 | 4,538,999 | |||||||||||||
| Turnover Ratio | 8 | 9 | 8 | 8 | 14.70 | |||||||||||||
| AS IS | ||||||||||||||||||
| GREENGO LTD. | Canola Grow (proprietorship) | Sugar Sap (partnership) | BannerCrop Inc. | Combined | Revaluation | GREENGO LTD. | First Year | Operating Adjustments | GREENGO LTD. | |||||||||
| 2022 | 2022 | 2022 | As Is | Adjustments | Operations | 2022-2023 | Jan 31 2023 | |||||||||||
| Return on Equity | ||||||||||||||||||
| Ending Equity Basis | ||||||||||||||||||
| Net income | – 0 | – 0 | 25,000 | 801,600 | 33,036,816 | |||||||||||||
| Ending Shareholders Equity | 675,000 | 650,000 | 100 | 1,325,100 | 38,354,302 | |||||||||||||
| 0.0% | 0.0% | 25000.0% | 60.5% | 86.1% | ||||||||||||||
| EBT (Earnings Before Taxes) | ||||||||||||||||||
| Earnings before income taxes | 566,500 | 661,000 | 25,000 | 1,252,500 | 45,531,243 | |||||||||||||
| Revenue | $ 7,750,000 | $ 14,560,000 | $ 7,450,000 | $ 29,760,000 | $ 66,720,000 | |||||||||||||
| EBT / Revenue | 7.31% | 4.54% | 0.34% | 4.21% | 68.24% | |||||||||||||
| EBIT (Earnings Before Interest & Income Taxes) | ||||||||||||||||||
| Earnings before income taxes | 566,500 | 661,000 | 25,000 | 1,252,500 | 45,531,243 | |||||||||||||
| Interest | 4,750 | 25,000 | 97,500 | 127,250 | 481,797 | |||||||||||||
| Earnings before interest and income taxes | 571,250 | 686,000 | 122,500 | 1,379,750 | 46,013,040 | |||||||||||||
| Revenue | $ 7,750,000 | $ 14,560,000 | $ 7,450,000 | $ 29,760,000 | $ 66,720,000 | |||||||||||||
| EBIT / Revenue | 7.37% | 4.71% | 1.64% | 4.64% | 68.96% | |||||||||||||
| EBITDA (Earnings Before Interest + Income Taxes + Depreciation & Amortization) | ||||||||||||||||||
| EBIT | 571,250 | 686,000 | 122,500 | 1,379,750 | 46,013,040 | |||||||||||||
| Add: Depreciation and amortization | 60,000 | 125,000 | 70,000 | 255,000 | 615,000 | |||||||||||||
| EBITDA | 631,250 | 811,000 | 192,500 | 1,634,750 | 46,628,040 | |||||||||||||
| Revenue | $ 7,750,000 | $ 14,560,000 | $ 7,450,000 | $ 29,760,000 | $ 66,720,000 | |||||||||||||
| EBITDA / Revenue | 8.1% | 5.6% | 2.6% | 5.5% | 69.9% | |||||||||||||
| Times Interest Earned | ||||||||||||||||||
| EBIT | 571,250 | 686,000 | 122,500 | 1,379,750 | 46,013,040 | |||||||||||||
| Interest | 4,750 | 25,000 | 97,500 | 127,250 | 481,797 | |||||||||||||
| EBIT / Interest | 120.26 | 27.44 | 1.26 | 10.84 | 95.50 |
Part E
| 1) Benefits of incorporation into a larger entity: |
| Shareholders are not liable on the company debts, avoiding legal entanglements |
| Have a huge opportunity to access funding from issuing shares of stock |
| Tax rate are lower, as we all know that personal income tax are higher than corporate tax rates. |
| 3) 3 conflicts: |
| Expense and Fee: in reality sometime fee and expense may go beyond budget of the investors or fund agreement. In some case, to keep the business running they may have to adjust the fund |
| Risk factor: usually the management team are more likely to take risk while the investors focus on dividend and capital gains |
| Value and |
| 4) Senior management positions would consider: |
| Financial Manager |
| Re-search and Marketing Manager |
| Product Manager |
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