uva-s-f-1211 (rosario)(2)
TRANSCRIPT
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8/13/2019 UVA-S-F-1211 (Rosario)(2)
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Model Facts
This spreadsheet supports STUDENTanalysis of the case, "Rosario
Acero S.A." (UVA-F-1211)
Please note:
This is a working model. Assumptions / Inputspresented can be
changed to vary the results. Please press F9 to recalculate results
after changing assumptions.
Revised March 7, 2006.
Copyright 1998, by the University of Virginia Darden School Foundation.
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Exh. 6
Exhibit 6
Rosario Acero S.A.
Forecast of Income Statement: Growth Financed with
The Privately-Placed Debt-and-Warrants Issue
Common Assumptions
Revenue Growth Rate = 10.30% Inventory/Revenues = 13.00%COGS/Revenues = 78.00% Other Curr. Assets/Revenues= 1.00%
SG&A/Revenues = 13.00% Gross Fixed Assets/Revenues= 48.00%
Tax Rate = 34.00% Accts. Payable/Revenues= 14.00%
Depreciation/Gross Fixed Assets = 5.60% Other. Curr. Liabs./Revenues= 7.00%
Cash/Revenues = 1.00% Interest Rate = 10.00%
Accts. Receivable/Revenues = 20.00% Change in Def'd Tax/Taxes = 25.00%
Base Lending Rate = 8.50% Primary Shares = 233,000
Fully-Diluted Shares = 273,000
Actual Projected
1996 1997 1998 1999 2000 2001 2002
Income Statement
Revenues $34.80 $38.38 $42.34 $46.70 $51.51 $56.81 $62.67
Cost of Goods Sold (27.65) (29.94) (33.02) (36.43) (40.18) (44.32) (48.88)
Selling, Gen'l, & Admin. (3.96) (4.99) (5.50) (6.07) (6.70) (7.39) (8.15)
Earnings Before Interest and Taxes 3.19 3.45 3.81 4.20 4.64 5.11 5.64
Interest (Notes and Old Loans) (1) (1.10) (0.73) (0.70) (0.65) (0.59) (0.51) (0.41)
Interest (New Loan @ 13%) (0.98) (0.98) (0.98) (0.98) (0.98) (0.98)
Profit Before Taxes 2.09 1.75 2.13 2.57 3.07 3.63 4.26
Taxes 0.00 (0.59) (0.72) (0.88) (1.04) (1.23) (1.45)
Profit After Taxes $2.09 $1.15 $1.41 $1.70 $2.03 $2.40 $2.81
Profit With Extraord. Item $1.76
Earnings per Share $7.57 $4.96 $6.04 $7.29 $8.70 $10.28 $12.06
Note 1: The firm is assumed to borrow at base rate plus two percent, and lend
at base rate less two percent.
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Exhibit 7
Rosario Acero S.A.
Forecast of Balance Sheets: Growth Financed with
The Privately-Placed Debt-and-Warrants Issue
Actual Projected
1996 1997 1998 1999 2000 2001 2002Balance Sheet
Cash $0.20 $0.38 $0.42 $0.47 $0.52 $0.57 $0.63
Accounts Receivable 6.80 7.68 8.47 9.34 10.30 11.36 12.53
Inventory 4.70 4.99 5.50 6.07 6.70 7.39 8.15
Other Current Assets 0.40 0.38 0.42 0.47 0.52 0.57 0.63
Total Current Assets 12.10 13.43 14.82 16.34 18.03 19.88 21.93
Gross Fixed Assets 16.70 18.42 20.32 22.42 24.72 27.27 30.08
Accumulated Depreciation (2.50) (3.53) (4.67) (5.93) (7.31) (8.84) (10.52)
Net Fixed Assets 14.20 14.89 15.65 16.49 17.41 18.43 19.56
Other Assets 0.10 0.10 0.10 0.10 0.10 0.10 0.10
Total Assets $26.40 $28.43 $30.57 $32.93 $35.54 $38.42 $41.59
Notes Payable (or Excess Cash) $4.80 ($0.76) ($0.84) ($0.81) ($1.00) ($1.44) ($2.17)
Accounts Payable 4.60 5.37 5.93 6.54 7.21 7.95 8.77
Other Current Liabilities 2.30 2.69 2.96 3.27 3.61 3.98 4.39
Total Current Liabilities 11.70 7.30 8.05 9.00 9.82 10.49 10.99
Old Long Term Debt 9.80 7.43 7.23 6.73 6.23 5.73 5.23
New Long Term Debt 7.50 7.50 7.50 7.50 7.50 7.50
Deferred Taxes 1.30 1.45 1.63 1.85 2.11 2.42 2.78
Total Liabilities 22.80 23.67 24.41 25.07 25.66 26.14 26.50
Common Stock 0.20 0.20 0.20 0.20 0.20 0.20 0.20
Paid-in Surplus 0.20 0.20 0.20 0.20 0.20 0.20 0.20
Retained Earnings 3.20 4.35 5.76 7.46 9.49 11.88 14.69
Total Liabilities and Equity $26.40 $28.43 $30.57 $32.93 $35.54 $38.42 $41.59
Comparative Ratios
EBIT/Interest 2.90 2.03 2.27 2.58 2.96 3.45 4.08
EBIT/(Interest + Amort.) 1.93 0.36 1.95 2.00 2.06 2.11 2.16
Liabilities/Equity 6.33 4.98 3.96 3.19 2.59 2.13 1.76
(Debt+Notes)/Equity 4.06 2.98 2.25 1.71 1.29 0.96 0.70
Profit/Revenues 5.1% 3.0% 3.3% 3.6% 3.9% 4.2% 4.5%
Profit/Equity 49.0% 24.3% 22.8% 21.6% 20.5% 19.5% 18.6%
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Exhibit 8
Rosario Acero S.A.
Forecast of Free Cash Flows: Growth Financed with
The Privately-Placed Debt-and-Warrants Issue
Projected
1997 1998 1999 2000 2001 2002
Earnings Before Interest and Taxes 3.45 3.81 4.20 4.64 5.11 5.64
Taxes (1.17) (1.30) (1.43) (1.58) (1.74) (1.92)
Earnings Before Interest and After Taxes 2.28 2.51 2.77 3.06 3.37 3.72
Plus Depreciation 1.03 1.14 1.26 1.38 1.53 1.68
Less Capital Expenditures (1.72) (1.90) (2.09) (2.31) (2.55) (2.81)
Less Additions to Net Working Capital (0.17) (0.55) (0.61) (0.67) (0.74) (0.82)
Free Cash Flow 1.41 1.20 1.33 1.46 1.61 1.78
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Exh.9
Exhibit 9
Rosario Acero S.A.
Forecast of Income Statement:
Growth Financed with Equity
Shares Are Sold at $9.00 Each
Common Assumptions
Revenue Growth Rate = 10.30% Inventory/Revenues = 13.00%
COGS/Revenues = 78.00% Other Curr. Assets/Revenues= 1.00%SG&A/Revenues = 13.00% Gross Fixed Assets/Revenues= 48.00%
Tax Rate = 34.00% Accts. Payable/Revenues= 14.00%
Depreciation/Gross Fixed Assets = 5.60% Other. Curr. Liabs./Revenues= 7.00%
Cash/Revenues = 1.00% Interest Rate = 10.00%
Accts. Receivable/Revenues = 20.00% Change in Def'd Tax/Taxes = 25.00%
Base Lending Rate = 8.50% 1996 Primary Shares = 233,000
1997+ Primary Shares = 1,066,333
Actual Projected
1996 1997 1998 1999 2000 2001 2002
Income Statement
Revenues $34.80 $38.38 $42.34 $46.70 $51.51 $56.81 $62.67
Cost of Goods Sold (27.65) (29.94) (33.02) (36.43) (40.18) (44.32) (48.88)
Selling, Gen'l, & Admin. (3.96) (4.99) (5.50) (6.07) (6.70) (7.39) (8.15)Earnings Before Interest and Taxes 3.19 3.45 3.81 4.20 4.64 5.11 5.64
Interest (on Notes and Old Loans) (1) (1.10) (0.68) (0.60) (0.50) (0.37) (0.23) (0.07)
Interest (New Loan @ 13%) 0.00 0.00 0.00 0.00 0.00 0.00
Profit Before Taxes 2.09 2.77 3.21 3.71 4.26 4.88 5.57
Taxes 0.00 (0.94) (1.09) (1.26) (1.45) (1.66) (1.89)
Profit After Taxes $2.09 $1.83 $2.12 $2.45 $2.81 $3.22 $3.68
Profit With Extraord. Item $1.76
Earnings per Share $7.57 $1.72 $1.99 $2.29 $2.64 $3.02 $3.45
Note 1: The firm is assumed to borrow at base rate plus two percent, and lend
at base rate less two percent.
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Exhibit 10
Rosario Acero S.A.
Forecast of Free Cash Flows:
Growth Financed with Equity
Shares Are Sold at $9.00 Each
Actual Projected1996 1997 1998 1999 2000 2001 2002
Balance Sheet
Cash $0.20 $0.38 $0.42 $0.47 $0.52 $0.57 $0.63
Accounts Receivable 6.80 7.68 8.47 9.34 10.30 11.36 12.53
Inventory 4.70 4.99 5.50 6.07 6.70 7.39 8.15
Other Current Assets 0.40 0.38 0.42 0.47 0.52 0.57 0.63
Total Current Assets 12.10 13.43 14.82 16.34 18.03 19.88 21.93
Gross Fixed Assets 16.70 18.42 20.32 22.42 24.72 27.27 30.08
Accumulated Depreciation (2.50) (3.53) (4.67) (5.93) (7.31) (8.84) (10.52)
Net Fixed Assets 14.20 14.89 15.65 16.49 17.41 18.43 19.56
Other Assets 0.10 0.10 0.10 0.10 0.10 0.10 0.10Total Assets 26.40 $28.43 $30.57 $32.93 $35.54 $38.42 $41.59
Notes Payable (or Excess Cash) 4.80 ($1.53) ($2.40) ($3.21) ($4.29) ($5.66) ($7.37)
Accounts Payable 4.60 5.37 5.93 6.54 7.21 7.95 8.77
Other Current Liabilities 2.30 2.69 2.96 3.27 3.61 3.98 4.39
Total Current Liabilities 11.70 6.54 6.49 6.59 6.53 6.27 5.79
Old Long Term Debt (Note 1) 9.80 7.43 7.23 6.73 6.23 5.73 5.23
New Long Term Debt 0.00 0.00 0.00 0.00 0.00 0.00
Deferred Taxes 1.30 1.54 1.81 2.12 2.49 2.90 3.37
Total Liabilities 22.80 15.50 15.52 15.44 15.24 14.89 14.39
Common Stock 0.20 1.20 1.20 1.20 1.20 1.20 1.20
Paid-in Surplus 0.20 6.70 6.70 6.70 6.70 6.70 6.70
Retained Earnings 3.20 5.03 7.15 9.59 12.41 15.63 19.30
Total Liabilities and Equity $26.40 $28.43 $30.57 $32.93 $35.54 $38.42 $41.59
Comparative Ratios
EBIT/Interest 2.90 5.08 6.32 8.45 12.37 21.95 81.14
EBIT/(Interest + Amort.) 1.93 0.37 2.27 2.32 2.38 2.43 2.48
Liabilities/Equity 6.33 1.20 1.03 0.88 0.75 0.63 0.53
(Debt+Notes)/Equity 4.06 0.46 0.32 0.20 0.10 0.00 -0.08
Profit/Revenues 5.1% 4.8% 5.0% 5.2% 5.5% 5.7% 5.9%
Profit/Equity 49.0% 14.2% 14.1% 14.0% 13.8% 13.7% 13.5%
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Exhibit 11
Rosario Acero S.A.
Forecast of Free Cash Flows:
Growth Financed with Equity
Shares Are Sold at $9.00 Each
Projected
1997 1998 1999 2000 2001 2002
Earnings Before Interest and Taxes 3.45 3.81 4.20 4.64 5.11 5.64
Taxes (1.17) (1.30) (1.43) (1.58) (1.74) (1.92)Earnings Before Interest and After Taxes 2.28 2.51 2.77 3.06 3.37 3.72
Plus Depreciation 1.03 1.14 1.26 1.38 1.53 1.68
Less Capital Expenditures (1.72) (1.90) (2.09) (2.31) (2.55) (2.81)
Less Additions to Net Working Capital (0.17) (0.55) (0.61) (0.67) (0.74) (0.82)
Free Cash Flow 1.41 1.20 1.33 1.46 1.61 1.78
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Exhibit 12
Rosario Acero
Selected 1995 Data on Publicly-Listed Peer Firms
AD CSA GA VAZ PI
Sales 381.0$ 362.8$ 397.4$ 755.2$ 117.1$Operating Margin 55.6 11.7 26 144.9 -1.1
Net Income 16.9 7.5 10.3 46.4 -5.1
Operating Margin/Sales 14.6% 3.2% 6.5% 19.2% -0.9%
Net Income/Sales 4.4% 2.1% 2.6% 6.1% -4.4%
LT Debt/Capital (Book) 40% 56% 22% 33% 42%
Total Debt/Capital (Book) 57% 66% 40% 37% 65%
Total Debt/Equity (Book) 1.33 1.94 0.67 0.59 1.86
Market Equity/Book Equity 1.85 1.25 1.50 2.10 0.90
Total Debt/Equity (Market) 0.72 1.55 0.44 0.28 2.06
Dividend Payout Ratio 27% 0% 15% 12% 0%
Dividend Yield 3% 0% 3% 1% 0%
P/E Ratio 9.5 15.9 11.3 15.0 7.3
Beta 1.35 1.05 1.00 1.15 2.50