Microsoft Word peachtree case study
Table 16 Common Size Normalized Balance Sheets
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- TOTAL CURRENT ASSETS 71.7%76.02%75.5%69.8%53.2%69.2%71.7%75.6%FIXED ASSETS
- TOTAL FIXED ASSETS 28.3%23.98%24.5%30.2%46.8%30.8%28.3%16.9%OTHER ASSETS
- TOTAL CURRENT LIABILITES 4.5%4.67%5.6%6.5%8.8%6.0%5.6%53.5%LONG TERM DEBT
- TOTAL EQUITY 39.5%42.84%44.1%42.2%19.8%37.7%44.1%31.7%TOTAL LIABILITIES EQUITY
| Table 16 Common Size Normalized Balance Sheets 6/30/2006 6/30/2005 6/30/2004 6/30/2003 6/30/2002 Average Median Industry Average ASSETS Current Assets Cash Accounts Receivable 27.2% 24.71% 30.0% 46.3% 29.4% 31.5% 29.4% 34.3% Inventory 1.6% 1.66% 1.9% 1.9% 2.6% 1.9% 1.9% 2.1% Short Term Investments 0.0% 0.00% 0.0% 0.0% 0.0% 0.0% 0.0% 7.2% TOTAL CURRENT ASSETS 71.7% 76.02% 75.5% 69.8% 53.2% 69.2% 71.7% 75.6% FIXED ASSETS Property, Plant, & Equipment 27.5% 23.36% 23.9% 29.3% 45.6% 29.9% 27.5% Land 0.0% 0.00% 0.0% 0.0% 0.0% 0.0% 0.0% 16.9% Other Fixed Assets 0.8% 0.62% 0.6% 0.9% 1.2% 0.8% 0.8% TOTAL FIXED ASSETS 28.3% 23.98% 24.5% 30.2% 46.8% 30.8% 28.3% 16.9% OTHER ASSETS Deposits 0.0% 0.00% 0.0% 0.0% 0.0% 0.0% 0.0% 5.8% TOTAL ASSETS 100.0% 100.00% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% CURRENT LIABILITIES Notes Payable (Short‐term) 4.1% 4.12% 4.8% 5.4% 7.4% 5.2% 4.8% 10.3% Accounts Payable 0.3% 0.42% 0.7% 0.8% 1.1% 0.7% 0.7% 23.1% Other Current Liabilities 0.1% 0.14% 0.1% 0.3% 0.3% 0.2% 0.1% 16.1% TOTAL CURRENT LIABILITES 4.5% 4.67% 5.6% 6.5% 8.8% 6.0% 5.6% 53.5% LONG TERM DEBT Notes Payable 55.9% 52.49% 50.4% 51.2% 71.4% 56.3% 52.5% 10.9% TOTAL LIABILITIES 55.9% 52.49% 50.4% 51.2% 71.4% 56.3% 64.4% Common Stock 1.7% 1.90% 2.4% 3.4% 5.6% 3.0% 2.4% Paid In Capital Retained Earnings 23.6% 24.84% 21.5% 7.5% ‐32.9% 8.9% 21.5% 31.7% Dividends 0.0% 0.00% 0.0% 2.7% 0.0% 0.5% 0.0% TOTAL EQUITY 39.5% 42.84% 44.1% 42.2% 19.8% 37.7% 44.1% 31.7% TOTAL LIABILITIES & EQUITY 100.0% 100.00% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Company Note: Some of the figures in the above table may not add as expected due to rounding or median values being used Page 75 of 141 Balance Sheet Discussion The common size balance sheet presented in Table 16 Common Size Normalized Balance Sheets allows the valuator to compare and contrast the Company to other businesses within the industry based on similar attributes such as sales and assets. The first thing that quickly jumps out is the large cash position as a percentage of assets compared to the industry average. The company’s median cash position from 2002‐2005) is roughly 50% higher. As discussed earlier, the valuator considered this item for adjustment but opted against it. This is due to the fact that the company’s bonding company looks favorably upon this when setting bonding rates. Other remaining current asset items were inline with industry averages. The fixed assets are higher than industry averages. There area couple of reasons for this. In Peachtree’s early days, the company hired independent contractors to handle much of their service calls. Now, the company hires only master plumbers and outfits them with vehicles. The second reason is the company’s involvement in new construction. Plumbing service contractors that do not engage in new installations of commercial equipment can get by with vans. Peachtree must invest in trailers to haul the new fixtures to job sites. During the valuator’s onsite review of the Company, the equipment appeared in good working order. The owner indicated that all of the equipment is meticulously maintained and that they have not lost any significant downtime due to equipment. Continued maintenance of the equipment is a critical success factor as much of it is aged. The Company has significantly lower current liabilities than the industry (4.5% as of June 30, 2006, versus the industry average of 53.5%). They pay their bills on time and have incurred almost no short‐term financing to operate the business. The company does have longer term liabilities due to the increased capital and equipment needs given the company’s business model. Page 76 of 141 Overall, the financial condition of the Company based on the balance sheet review is better than average, although the valuator believes there is some risk albeit, not significant) associated with some aged pieces of equipment. Download 0.84 Mb. Share with your friends:
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