ICS Manufacturing Company Case Study\t\u00a0\tICS Manufacturing Company produces plastic parts for the automotive industry.\u00a0 Here is their Income Statement for 2015 “\ufffd\t\u00a0\tICS Manufacturing Company\tIncome Statement for 2015\t\u00a0\t \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd Sales Revenue \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd\u00a0 $35,500,000\t \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd Cost of Goods Sold \ufffd \ufffd \ufffd \ufffd \ufffd\u00a0\u00a0 \u00a0 12,725,000\t \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd Selling, General & Admin Exp \ufffd \ufffd \ufffd \ufffd\u00a0\u00a0 \u00a0 11,200,000\t \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd Depreciation Expense \ufffd \ufffd \ufffd \ufffd\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0 3,200,000\t \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd EBIT \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \u00a0\u00a0\u00a0 8,375,000\t \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd Interest Expense \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd\u00a0\u00a0 \ufffd\u00a0 350,000\t \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd Taxable Income \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0 8,025,000\t \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd Taxes \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \u00a0\u00a0\u00a0 3,210,000\t \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd Net Income \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \u00a0\u00a0\u00a0 4,815,000\t\u00a0\tTransfer this income statement to an Excel spreadsheet and begin to prepare a Pro Forma Income statement for 2016 based on the following information:\t\u00a0\t1. \ufffd Sales revenue to increase 5.2%, COGS to increase 4.5%, S,G&A will increase 3.8% and depreciation expense will be $3,255,000.\u00a0 Assume interest expense to be $375,000 and taxes are to be 40% of taxable income.\u00a0 You will now have income statements for 2015 and 2016 for ICS Manufacturing.\u00a0\t\t\u00a0\tThis is the balance sheet information for ICS Manufacturing Company:\t\u00a0\tICS Manufacturing Company\tBalance Sheet for year ending December 31, 2015\t\u00a0\t \ufffd \ufffd\u00a0 Assets\u00a0 \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd\u00a0 \u00a0 Liabilities \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd\u00a0 \u00a0\u00a0 \ufffd\u00a0\u00a0\u00a0 \u00a0\u00a0\tCash \ufffd \ufffd \ufffd \ufffd \ufffd\u00a0\u00a0 \u00a0\u00a0 $2,625,000 \ufffd \ufffd \ufffd \ufffd \ufffd\u00a0 \u00a0 Accounts Payable \ufffd \ufffd\u00a0 $5,825,000\tAccounts Receivable\u00a0 \u00a0\u00a0 $2,715,000\u00a0\u00a0 \ufffd\u00a0\u00a0\u00a0\u00a0 \u00a0 \ufffd \ufffd \ufffdOther Current Liabilities $3,365,000 \ufffd \ufffd\tInventories \ufffd \ufffd \ufffd\u00a0\u00a0 \u00a0\u00a0 $1,514,000\u00a0\u00a0 \ufffd \ufffd \ufffd \ufffd \ufffd\u00a0\u00a0 Total Current Liabilities\u00a0\u00a0 $9,190,000 \ufffd\u00a0\u00a0\u00a0\t \ufffd \ufffd\u00a0 Total Current Assets\u00a0\u00a0 \u00a0\u00a0$6,854,000 \ufffd \ufffd \ufffd \ufffd \ufffd\u00a0 \u00a0\t \ufffd \ufffd\u00a0\t\u00a0\t \ufffd \ufffd\u00a0\u00a0 Long Term Assets \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd\u00a0\u00a0\u00a0 Long Term Liabilities\t\u00a0P, P & E \ufffd \ufffd \ufffd \ufffd $12,745,000\u00a0\u00a0\u00a0 \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd\u00a0\u00a0\u00a0\u00a0 Long Term Debt \ufffd\u00a0\u00a0\u00a0 \ufffd $1,225,000 \ufffd\u00a0\u00a0\u00a0\u00a0 \ufffd \ufffd\u00a0 Goodwill \ufffd \ufffd \ufffd \ufffd \u00a0\u00a0 $1,205,000 \ufffd \ufffd \ufffd \ufffd \ufffd\u00a0 Other LT Debt \ufffd \ufffd \ufffd \ufffd\u00a0 $2,230,000\t \ufffd \ufffd\u00a0 Intangible Assets \ufffd\u00a0\u00a0 \u00a0\u00a0 $5,275,000\u00a0\u00a0 \ufffd \ufffd \ufffd \ufffd\u00a0\u00a0\u00a0 Total LT Liabilities\u00a0\u00a0\u00a0\u00a0 \ufffd $3,455,000\t \ufffd \ufffd\u00a0 Total LT Assets \ufffd \ufffd $19,225,000 \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd\u00a0\u00a0\u00a0 Total Liabilities \ufffd \ufffd \ufffd \ufffd \ufffd\u00a0 $12,645,000\t \ufffd \ufffd\u00a0 Total Assets \ufffd \ufffd \ufffd $26,079,000 \ufffd \ufffd \ufffd \ufffd \ufffd\u00a0\t \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd\t\u00a0\t \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd\u00a0\u00a0\u00a0 \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd\u00a0 Owners’ Equity \ufffd \ufffd\t \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd Common Stock \ufffd \ufffd \u00a0\u00a0\u00a0\u00a0 $6,425,000\t \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd Retained Earnings \ufffd\u00a0 \u00a0\u00a0\u00a0\u00a0 $7,009,000\t \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd Total Owners’ Equity\u00a0\u00a0\u00a0\u00a0 $13,434,000\t \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd Total Liab\/OE \ufffd \ufffd\u00a0\u00a0 \u00a0 $26,079,000\t \ufffd \ufffd\u00a0\tTransfer this balance sheet to an Excel spreadsheet and begin to prepare a Pro Forma Balance Sheet for 2016 based on the following information:\t\u00a0\t2. \ufffd Cash will increase to $2,825,000 and accounts receivable will increase by 15%.\u00a0 The inventories will go up 35% and P, P, &E will go up $2,000,000 with an expansion to the plant. Long term debt will increase to $2,000,000 to help finance the plant expansion and add $1,137,150 to other LT debt.. You will now have balance sheets for 2015 and 2016 for ICS Manufacturing.\t\u00a0\t\u00a0\tUsing the 2015 and 2016 financials for ICS, complete the following “\ufffd show calculations and\/or numbers you used to derive your answer:\t\u00a0\t3. \ufffd ICS wants to take around $400,000 of its cash and invest in marketable securities. They anticipate receiving around $7.5% interest on their investment and would like to have it held for 10 years. What will be the FV of this $400,000 investment?\t\u00a0\t4. \ufffd ICS believes they will only gain a 6% return on their $400,000 investment. Using the Rule of 72, how many years will it take to double their investment?\t\u00a0\t5. \ufffd ICS plans on expanding their plant and will fund $2,000,000. Part of the funding will come from cash, but the balance of $775,000 will be financed. The interest rate will be 5% and ICS plans on borrowing the funds for 4 years. Prepare a loan amortization schedule for the 4 years with 5% interest for the $775,000 and assume making one payment per year. Show the schedule.\t\u00a0\t6. \ufffd Using your 2015\/2016 Income Statement and Balance Sheet, add a column for percentage of total.\u00a0 Compute the percentages for each line item for the financial statements.\u00a0 For the 2015 Income Statement, what is the percentage of COGS as compared to total sales? Is this figure reasonable and what is COGS and why is it important to a company?\t\u00a0\t7. \ufffd Financial Ratios provide information to analyze a company’s performance.\u00a0 Solve the following ratios for 2015 and 2016 using the Income Statement and Balance sheets you prepared for ICS Manufacturing.\t\u00a0\ta. \ufffd\u00a0 \u00a0Current Ratio “\ufffd current assets\/current liabilities\tb. \ufffd \u00a0Quick Ratio “\ufffd (current assets “\ufffd inventories)\/current liabilities\tc. \ufffd\u00a0 \u00a0Cash Ratio “\ufffd cash\/current liabilities\td. \ufffd \u00a0Debt Ratio “\ufffd total liabilities\/total assets\te. \ufffd\u00a0 \u00a0Cash Coverage Ratio “\ufffd (EBIT + depreciation\/interest expense\tf. \ufffd\u00a0 \u00a0Inventory Turnover “\ufffd cost of goods sold\/inventory\tg. \ufffd \u00a0Receivables Turnover “\ufffd sales\/accounts receivable\th. \ufffd \u00a0Total Asset Turnover “\ufffd sales\/total assets\ti. \ufffd\u00a0\u00a0 \u00a0Profit Margin “\ufffd net income\/sales\tj. \ufffd\u00a0\u00a0 \u00a0Return on Equity “\ufffd net income\/total owner’s equity\t\u00a0\t\u00a0\t8. \ufffd Find\u00a0the industry ratios for the company using the Dun & Bradstreet\u00ae\u00a0Key Business Ratios.\u00a0\u00a0 Locate the Dunn & Bradstreet Database by accessing the University of Phoenix Library and then locating Library Resources. Click on Alphabetical List of Resources and find Dunn and Bradstreet. Click on the link and search for your selected company. ISC is a manufacturing company of plastic parts for the automotive industry “\ufffd try and select a company closest to our company. Please use 3089 Plastic Products and NAICS of 326199 for manufacturing using 2014 data and the lower amount.\u00a0 Only provide the Quick and Current Ratios from 2015\/2016 from problem 7 and add the ratios from Dun & Bradstreet to compare and briefly suggest what direction ICS should head into with the comparison.\u00a0\t\u00a0\t\u00a0\t9. \ufffd ICS plans to expand their operations as stated in Problem 5 “\ufffd and are considering taking the loan “\ufffd however, they have a few investors that are interested in lending money for this venture.\u00a0 They need a total of $775,000, and if they lend the money today, ICS will repay it, with interest, at the end of the year.\u00a0 Company A agrees to lend $300,000 and they require 5% interest, Company B will lend $200,000 at 6% interest, and Company C will loan the balance but they won’t settle for less than 10% interest.\u00a0 What is the weighted average cost of this capital (WACC)?\u00a0\t\u00a0\t\u00a0\t10. In 250-350 words, explain what cash flow is and why cash is so important to a business.\u00a0\u00a0\tInclude in your analysis the cash that ICS maintains on hand and whether it is sufficient or not.<\/p>\n","protected":false},"excerpt":{"rendered":"
ICS Manufacturing Company Case Study \u00a0 ICS Manufacturing Company produces plastic parts for the automotive industry.\u00a0 Here is their Income Statement for 2015 “\ufffd \u00a0 ICS Manufacturing Company Income Statement for 2015 \u00a0 \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd Read More …<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-216695","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/216695","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/comments?post=216695"}],"version-history":[{"count":0,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/216695\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/media?parent=216695"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/categories?post=216695"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/tags?post=216695"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}