Synopsis #1 : Tire City, Inc
From: Jack Martin, Chief Financial Officer
To: MidBank
RE: Independent Financial Analysis of Tire City in Reference to Loan Extension
Attachments: Income Statement, Balance Sheet, Key Ratio Analysis and Sensitivity Analysis
Hello All,
This synopsis and its contents summarize the indepent financial analysis that me and my tema have performed for the Fiscal Year 1995 as well as forecasted years 1996 and 1997. Feel free to follow along with the attached exhibits. To begin with, Tire City is a rapidly growing retail distributor of automotive
Tires in the NorthEastern United States. Our Tires are sold through 10 chain stores located across the U.S.
We have an optimal inventory management system and are usually able to fullfill …show more content…
Revenue Growth
In terms of revenue growth over the past 2 years there has been an average growth of 17.5% in our sales year over year and we expect this to grow further entering 1996 and 1997 where our average growth in sales is anticipated to be at 20% each year. By the year 1997 we expect to be earning $33,847,200 in sales representing a growth of 40% from our current sales level. The confidence and optimism for sales growth is rooted in Tirecity’s ability to provide excellent service and competitive pricing which has yielded us a high level of customer satisfaction. Moving forward, it is expected that this growth will continue and as it will continue so will our success as a company.
Profitability
In terms of profitability we expect to maintain a Gross margin of 42% as we have been over the past 3 years and this trend is expected to continue as sales levels rise. Furthermore, in terms of our net operating margin we have seen a rise from 4.81% in 1993 to 5.06% in 1995 and we expect this continue to grow to
5.1% in 1997 representing a growth in operating income from $780,000 in 1993 to $1,740,000 in 1997.
This represents a growth of operating income of 123%. Furthermore we maintain an excellent Return
From: Jack Martin, Chief Financial Officer
To: MidBank
RE: Independent Financial Analysis of Tire City in Reference to Loan Extension
Attachments: Income Statement, Balance Sheet, Key Ratio Analysis and Sensitivity Analysis
Hello All,
This synopsis and its contents summarize the indepent financial analysis that me and my tema have performed for the Fiscal Year 1995 as well as forecasted years 1996 and 1997. Feel free to follow along with the attached exhibits. To begin with, Tire City is a rapidly growing retail distributor of automotive
Tires in the NorthEastern United States. Our Tires are sold through 10 chain stores located across the U.S.
We have an optimal inventory management system and are usually able to fullfill …show more content…
Revenue Growth
In terms of revenue growth over the past 2 years there has been an average growth of 17.5% in our sales year over year and we expect this to grow further entering 1996 and 1997 where our average growth in sales is anticipated to be at 20% each year. By the year 1997 we expect to be earning $33,847,200 in sales representing a growth of 40% from our current sales level. The confidence and optimism for sales growth is rooted in Tirecity’s ability to provide excellent service and competitive pricing which has yielded us a high level of customer satisfaction. Moving forward, it is expected that this growth will continue and as it will continue so will our success as a company.
Profitability
In terms of profitability we expect to maintain a Gross margin of 42% as we have been over the past 3 years and this trend is expected to continue as sales levels rise. Furthermore, in terms of our net operating margin we have seen a rise from 4.81% in 1993 to 5.06% in 1995 and we expect this continue to grow to
5.1% in 1997 representing a growth in operating income from $780,000 in 1993 to $1,740,000 in 1997.
This represents a growth of operating income of 123%. Furthermore we maintain an excellent Return