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BCD Ltd. Case Study: Financial Analysis

You have been asked to find the value of BCD Ltd. and have been provided with thefollowing information:

2010 Sales 4,850,000
Cost of goods sold 3,260,000
Selling, general and admin (SG&A) 1,070,000
Depreciation 200,000
Interest 40,000
Other 30,000
Net income before taxes 250,000
Income taxes (@40%) 100,000
Net income 150,000

Other information provided to you is that sales are expected to grow at a rate of 5% in each of the next 3 years, while cost of goods sold is expected to move to 70% of sales beginning in 2011 and remain at that level. However SG&A costs are expected to decrease to 15% of sales. Capital expenditures are expected to be $200,000 in 2012 and 2013. Working capital is expected to grow at a rate equal to the sales growth, from its current level of $5,500,000. Given this information what are the free cash flows for 2011, 2012 and 2013 respectively?

a. $165,325; ($25,509); ($15,884)
b. $221,325; $30,491; $40,116
c. $245,325; $54,491; $64,116
d. $245,325; $343,241; $367,303
e. $245,325; $68,241; $92,303

Solution Preview

You have been asked to find the value of BCD Ltd. and have been provided with the following information:
2010
Sales 4,850,000
Cost of goods sold 3,260,000
S, G and A 1,070,000
Depreciation 200,000
Interest 40,000
other 30,000
Net income before taxes 250,000
Income taxes 100,000
Net income 150,000
Other information provided to you is that sales are expected to grow at a rate of 5% in each of the next 3 years, while cost of goods sold is ...

Solution Summary

The financial analysis case study for BCD Ltd. The expert finds the value of BCD Ltd.

$2.19