This spreadsheet was prepared by Associate Professor Marc Lipson.

Copyright 2007 by the University of Virginia Darden School Fou

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Rev. Nov. 3, 2010.

This spreadsheet supports STUDENT analysis of the case Alliance Concrete UVA-F-1527).

was prepared by Associate Professor Marc Lipson. Copyright 2007 by the University of Virginia Darden School Foundation,
A. All rights reserved. For customer service inquiries, send an e-mail to sales@dardenbusinesspublishing.com. No part of this
be reproduced, stored in a retrieval system, posted to the Internet, or transmitted in any form or by any meanselectronic,
copying, recording, or otherwisewithout the permission of the Darden School Foundation.

Exhibit 1
ALLIANCE CONCRETE
Income Statements
2002
Income Statement (in thousands of dollars)
Revenue
Cost of goods sold
Gross margin
General and administrative
Earnings before interest and taxes
Interest
Tax
Net income
Additional Data
Yards sold (in thousands)
Average price per yard (in dollars)
Average cost per yard (in dollars)
Depreciation (in thosands of dollars)
Source: Created by case writer.

2003

2004

128,978 143,560 161,863

100,857 111,203 125,756
28,121 32,357 36,107
12,482 13,685 18,131
15,639 18,672 17,976
4,537
6,150
5,964
11,102 12,522 12,012
3,882
4,288
4,312
7,220
8,234
7,700

1,751
73.66
57.60
5,436

1,850
77.60
60.11
5,762

1,957
82.71
64.26
5,983

2005
185,815
144,594
41,221
17,327
23,894
5,695
18,199
6,210
11,989

2,085
89.12
69.35
6,439

Exhibit 2
ALLIANCE CONCRETE
Balance Sheets

Balance Sheet ($1,000)

Cash
Accounts receivable
Inventory
Current assets
Plant and equipment
Accounts payable
Other accrued expenses
Current liabilities
Long-term debt
Owners' equity

Financial Statement Relations

Margins and Returns
Gross margin
Net margin
Return on book assets
Return on book equity
Asset Ratios
Days receivables
Days inventory
Days payables
Total asset turnover
Fixed asset turnover
Leverage Ratios
Debt to prior year EBITDA
Debt to total value (book)
Interest coverage

2002

2003

2004

2005

2,837
18,092
3,549
24,478
87,534
112,012

3,330
19,823
4,238
27,391
91,392
118,783

3,043
23,104
4,233
30,380
93,569
123,949

4,180
28,203
4,615
36,998
97,476
134,474

8,891
5,313
14,204
55,000
42,808
112,012

9,609
5,713
15,322
75,000
28,461
118,783

11,067
6,490
17,557
71,000
35,392
123,949

13,534
7,897
21,431
67,000
46,043
134,474

21.80%
5.60%
6.45%
16.87%

22.54%
5.74%
6.93%
28.93%

22.31%
4.76%
6.21%
21.76%

22.18%
6.45%
8.92%
26.04%

51.20
12.84
32.18
1.15
1.47

50.40
13.91
31.54
1.21
1.57

52.10
12.29
32.12
1.31
1.73

55.40
11.65
34.16
1.38
1.91

2.98
49.10%
3.45

3.56
63.14%
3.04

2.91
57.28%
3.01

2.80
49.82%
4.20

Source: Created by case writer.

Yards sold (in thousands)

Average price per yard (in dollars)
Average cost per yard (in dollars)
Capital Expenditure
Depreciation
Income Statement ($1,000)
Revenue
Cost of goods sold
Gross margin
General and administrative
Earnings before interest and taxes
Interest
Taxable Income
Tax
Net income
Dividends
Addition to Retained Earnings

2005

Forecast

2,085
89.12
69.35

2,200
94.02
76.28
16,000
7,500

185,815
144,594
41,221
17,327 9.32%
23,894
5,695
18,199
6,210 34.81%
11,989

206,847
167,826
39,021
19,288
19,733
6,179
13,554
4,718
8,836
3,000
5,836

Balance Sheet ($1,000)

Cash
Accounts receivable
Inventory
Current assets
Plant and equipment
Total Assets

4,180 2.25%
28,203 15.18%
4,615 2.48%
36,998
97,476
134,474

4,653
31,395
5,137
41,186
97,476
138,662

Accounts payable
Other accrued expenses
Current liabilities
Long-term debt
Owners' equity
Total Liabilites & Owner's Equity

13,534
7,897
21,431
67,000
46,043
134,474

15,066
8,791
23,857
63,000
51,879
138,736

7.28%
4.25%

Financial Statement Relations

Margins and Returns
Gross margin
Net margin
Return on book assets
Return on book equity
Asset Ratios
Days receivables
Days inventory
Days payables
Total asset turnover
Fixed asset turnover
Leverage Ratios
Debt to prior year EBITDA
Debt to total value (book)
Interest coverage
Source: Created by case writer.

22.18%
6.45%
8.92%
26.04%

18.86%
4.27%
6.37%
17.03%

55.40
11.65
34.16
1.38
1.91

55.40
11.17
32.77
1.49
2.12

2.80
50%
4.20

2.31
45%
3.19

Assumptions
It is given that expected sales are to increase by 2.2 million cubic yards.

Used the average of worst case scenario price increase(4%) and the best case scenario price increase(7%), which is 5
Used the 10% increase in cost to give company more room incase of unexpected cost increase.
Planned expenditure given in the case.
The depreciation expected is also given in the case.

Forcasted revenue is calculated by the yards expected to sell by the expected price.
Multiply the expected revenue to the percentage of 2005's COGS/Revenue.
Difference from Revenue and COGS.
Multiply the expected revenue to the percentage of 2005's G&A/Revenue.
Difference from Gross Margin - G&A.
EBIT multiply by 8.5%, interest is given in the case.
Difference from EBIT - Interest.

To be conservative, I used the average percentage from the previous years instead of only last year's because last yea
Difference from Taxable Income and Tax.
The new owners (National) want to increase the dividend payout for 2006 to 3 million dollars.
Difference from Net Income and Dividend Payout

Expected cash will be 2.25% of expected revenue. The 2.25% comes from 2005's Cash/Revenue.
Expected Accounts Receivable will be 15.18% of expected revenue. The 15.18% comes from 2005's AR/Revenue.
The forecasted Inventory will be 2.48% of sales. 2.48% is from 2005's Inventory/Revenue.
The forecasted Plant and Equipment will stay the same.

Accounts Payable/Revenue = 7.28%, forecasted AP will be 7.28% of forecasted Revenue.

Other accrued expenses/Revenue = 4.25%, forecasted Other Expenses wil be 4.25% of Revenue.
Total of current liabilities.
Given information that previous owners will pay 4 million dollarsa year for each of the next 5 years from 2003.
2005's Owner's Rquity + Addition to Retained Earnings for Projected year.
Total of Liabilities and Owner's Equity.

ncrease(7%), which is 5.5%.

year's because last year's was the lowest.

m 2005's AR/Revenue.

5 years from 2003.

Yards sold (in thousands)

Average price per yard (in dollars)
Average cost per yard (in dollars)
Capital Expenditure
Depreciation
Income Statement ($1,000)
Revenue
Cost of goods sold
Gross margin
General and administrative
Earnings before interest and taxes
Interest
Taxable Income
Tax
Net income
Dividends
Addition to Retained Earnings

2005

No Dividends

2,085
89.12
69.35

2,200
94.02
76.28
16,000
7,500

185,815
144,594
41,221
17,327 9.32%
23,894
5,695
18,199
6,210 34.81%
11,989

206,847
167,826
39,021
19,288
19,733
6,179
13,554
4,718
8,836
0
8,836

Balance Sheet ($1,000)

Cash
Accounts receivable
Inventory
Current assets
Plant and equipment
Total Assets

4,180 2.25%
28,203 15.18%
4,615 2.48%
36,998
97,476
134,474

4,653
31,395
5,137
41,186
105,976
147,162

Accounts payable
Other accrued expenses
Current liabilities
Long-term debt
Owners' equity
Total Liabilites & Owner's Equity

13,534
7,897
21,431
67,000
46,043
134,474

15,066
8,791
23,857
63,000
54,879
141,736

7.28%
4.25%

Financial Statement Relations

Margins and Returns
Gross margin
Net margin
Return on book assets
Return on book equity
Asset Ratios
Days receivables
Days inventory
Days payables
Total asset turnover
Fixed asset turnover
Leverage Ratios
Debt to prior year EBITDA
Debt to total value (book)
Interest coverage
Source: Created by case writer.

22.18%
6.45%
8.92%
26.04%

18.86%
4.27%
6.00%
16.10%

55.40
11.65
34.16
1.38
1.91

55.40
11.17
32.77
1.41
1.95

2.80
50%
4.20

2.31
44%
3.19

Assumptions
It is given that expected sales are to increase by 2.2 million cubic yards.

Used the average of worst case scenario price increase(4%) and the best case scenario price increase(7%), which is 5
Used the 10% increase in cost to give company more room incase of unexpected cost increase.
Planned expenditure given in the case.
The depreciation expected is also given in the case.

Forcasted revenue is calculated by the yards expected to sell by the expected price.
Multiply the expected revenue to the percentage of 2005's COGS/Revenue.
Difference from Revenue and COGS.
Multiply the expected revenue to the percentage of 2005's G&A/Revenue.
Difference from Gross Margin - G&A.
EBIT multiply by 8.5%, interest is given in the case.
Difference from EBIT - Interest.

To be conservative, I used the average percentage from the previous years instead of only last year's because last yea
Difference from Taxable Income and Tax.
Executed the option to not payout dividends
Difference from Net Income and Dividend Payout

Expected cash will be 2.25% of expected revenue. The 2.25% comes from 2005's Cash/Revenue.
Expected Accounts Receivable will be 15.18% of expected revenue. The 15.18% comes from 2005's AR/Revenue.
The forecasted Inventory will be 2.48% of sales. 2.48% is from 2005's Inventory/Revenue.
The forecasted Plant and Equipment includes the capital expenditure.

Accounts Payable/Revenue = 7.28%, forecasted AP will be 7.28% of forecasted Revenue.

Other accrued expenses/Revenue = 4.25%, forecasted Other Expenses wil be 4.25% of Revenue.
Total of current liabilities.
Given information that previous owners will pay 4 million dollarsa year for each of the next 5 years from 2003.
2005's Owner's Rquity + Addition to Retained Earnings for Projected year.
Total of Liabilities and Owner's Equity.

ncrease(7%), which is 5.5%.

year's because last year's was the lowest.

m 2005's AR/Revenue.

5 years from 2003.