«Range│[1]HistoricBS_Summary!K12:AG37│0│0│  »
COMPANY COMMON SIZE BALANCE SHEET
(Common size is putting all numbers into percentages)
«Range│[1]HistoricBSCommonSize!L11:V79│0│0│  »
Company historical Profit & Loss
«Range│[1]HistoricIS!L11:V55│0│0│ »
(Common size is putting all numbers into percentages)«Range│[1]HistCommonSizeIS!K11:V55│0│0│  »
RMA Peer Comparisons
For purposes of comparison with industry financial measures available from non-public company sources, «Cell│[1]ReportWriter!b16│0││I» reviewed the Annual Statement Studies, published by The Risk Management Association (RMA). RMA compiled average percentage income statement and balance sheets and key financial ratios of companies classified under Standard Industrial Classification (SIC) # «Cell│[1]ReportWriter!B30│0││1711/238220». «Cell│[1]ReportWriter!b15│0││I» believe the RMA data provide limited comparative perspective and strict comparisons should be made with caution.
From the following ratio comparison you be able to see how Peachtree compares to other private companies in the same industry. The liquidity ratios show how liquid the company is in case of a forced liquidation or any other reason for the need of quick cash. The coverage and leverage ratios compare how well the company can cover it obligations. The operating ratios will show how well management is utilizing the company’s assets.
The following liquidity ratios are compared to the subject company.
«Range│[1]RMALiquidityRatios!K12:AG61│0│0│  »As you can see Peachtree has ample current & quick ratios and because of these excess cash equivalencies they have a very low working capital turnover. Peachtree also able to collect their money quicker than industry standards. Inventory and payables turnover was incomplete.
The following coverage and leverage ratios are compared to the subject Company.
«Range│[1]RMACoverageRatios!K12:AO40│0│0│  »
Some of these ratios were incomplete as well but because of the high level of cash and investments the company has a low debt to tangible worth ratio. This makes the company very solvent in case of an unexpected cash call.
The following operating ratios are compared to the subject company.
«Range│[1]RMAOperatingRatios!K12:AG50│0│0│  » As far as income from operations the Peachtree has trended right in the middle of the industry with shows there profit is average compared to other companies. There revenues and net income have increased dramatically since they expanded into the residential sector making them more comparable to its peers.
SUMMARY OF FINANCIAL RATIOS
You will find that Peachtree has much more fixed assets, cash and marketable securities then the industry standards. This creates a strong balance sheet however the company doesn’t need all of these extra assets to operate. Also this skews other variables like “sales per working capital” in the liquidity ratios and any “asset turnover” in the operation ratios. If you were to take these extra assets off the balance sheet then the remaining comparable ratios are fairly comparative to industry standards.
Normalization adjustments are required to adjust the historical financial statements so that they are representative of a normal condition as of the valuation date.
Balance Sheet Adjustments Book Value (Going Concern)
The Company’s reported book value at the date of valuation was $«Cell│[1]AssetBookValue!P17│0││4,489,000» . Listed below, «Cell│[1]ReportWriter!b16│0││I» have identified adjustments that are required to restate shareholders’ equity and reflect the net asset value of the Company. I felt it was important to represent a 5 year history to show patterns and trends, however most of the adjustments and attention were given to the present balance sheet. Those adjustments include the following:
-
Working capital was way over funded and management said $750k would be sufficient.
-
Accounts Receivables was adjusted $13,000 because one client just filed chapter 7 bankruptcy ($9500) and $3500 was over 180 days old with no expectation of collection.
-
Inventories were adjusted $8000 because of some obsolete products and to reflect a LIFO to FIFO accounting standard which was adjusted to the amount in the LIFO reserve.
-
Short-term investments were adjusted $1,400,000 to reflect the amount that management needed to sustain normal working future capital expenditures and working capital for large account.
-
Property/Plant & Equipment were adjusted $458,250 to reflect the current appraised market value (see attached letter in exhibits).
-
The adjacent land was held on the balance sheet for investment and for future expansion. Management said they didn’t see a need for expanding the facility in the foreseeable future so it was taken off the books. If the owners decided to sell the company that land would probably be sold with it, however it would need a current appraisal and then it should be added onto the total value of the company.
-
Other assets was adjusted to reflect the Kelly Book Value of the fleet of vehicles.
-
None-operating liabilities was adjusted by $100,000 to reflect the loan amount on the adjacent land which is considered excess assets and non-operating.
-
Deferred income taxes was adjusted $137,000 from build-in-gains on the LIFO reserve and it reflects a NPV of PPE using a 7 year horizon and a 5% discount rate (risk-free).
«Range│[1]AdjustedBS_Summary!L11:V36│0│0│  »
Share with your friends: |
