Business Memo

TO: David Dale, CEO Dale Jewelry

FROM: Trent Schmidt, student; Joe Domina, student; Nathan Haas, student; Andrew Reindl, student; and Sam Wiedemeier, student

DATE: March 26th, 2014

SUBJECT: Forecast Figures Through 2016

Introduction

This is a business memo summarizing the attached spreadsheets on forecasted figures for Dale Jewelry. The amount of total assets are $4,655.82, $4,908.17, and $5,175.66 for 2014, 2015, and 2016 respectively. The dividends paid for years 2014, 2015 and 2016 are $125.77, $134.87, and $146.80 respectively. Cash conversion trends dropped 10 days from 151 days to 141 days in 2013. We estimate the cash conversion will remain steady at 141 days trough 2016. The ROE ratio has been trending downwards and is estimated to continue on that trend through 2016. The net profit margin and equity multiplier are trending downwards with the ROE.

Total Assets:

The total assets amounts forecasted from 2014 to 2016 has a continued increase at a pretty steady pace compared to the amounts from 2011 to 2013. The amounts forecasted are; 2014: $4,655.82, 2015: $4,908.17, and 2016: $5,175.66. The total assets is forecasted to increase about 7.66% in 2014, 5.42% in 2015, and 5.45% in 2016, a bit under the average growth of 8.89% from 2011 to 2013.

Dividends Paid:

The forecasted dividends paid are projected out to year 2016. Using a payout percentage of 35% of Net Income, we calculated out values. In 2014 we estimate a $125.77 jumping from $68.60 in 2013, which is almost a 85% increase. 2015 has an estimated $134.87 and 2016 has a estimated $146.80 rising along with the estimated net income value.

Cash Conversion Trends

The cash conversion trends from 2011-2013 goes from 150 days in 2011, 151 days in 2012, and 141 days in 2012. The three components of the cash conversion calculation are accounting receivable days outstanding, inventory conversion period, and payable deferral period. The spreadsheet lays out all three of these on the bottom of the...