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Financial Management Report
Jim's Stationery Store, Inc.
Multi-Year Scenario #1
(Dollars and Shares in Thousands, Except Per Share Amounts)

	Forecast
	12 Months Year 1		12 Months Year 2		12 Months Year 3		12 Months Year 4		12 Months Year 5
1.    Working Capital Management:
Net Working Capital:
Current Assets	$114		$126		$138		$152		$166
Current Liabilities	(75)		(79)		(82)		(85)		(88)
Net Working Capital	$39		$47		$55		$67		$78
Current Ratio:
Current Assets, divided by Current Liabilities	1.52		1.59		1.67		1.78		1.88
Quick Ratio:
Cash plus Accounts Receivable divided by Current Liabilities	0.69		0.72		0.75		0.80		0.84
Net Working Capital Turnover:
Net Sales, divided by Net Working Capital	12.82		11.70		11.00		9.94		9.40
2.    Asset Management:
Number of Days Sales in Accounts Receivable
Accounts Receivable, divided by Net Sales/365	28.9		28.9		28.9		28.9		28.9
Number of Days Cost of Goods Sold in Inventory
Inventory, divided by Cost of Goods Sold / 365	65.6		65.6		65.6		65.6		65.6
Capital Expenditures (Net):
Ending Property, Plant and Equipment, minus Beginning Property, Plant and Equipment	$36		$10		$11		$12		$14
Depreciation (Net):
Ending Accumulated Depreciation, minus Beginning Accumulated Depreciation	$6		$7		$8		$9		$10
Net Property, Plant and Equipment:
Property, Plant and Equipment, minus Accumulated Depreciation	$30		$33		$36		$40		$44
Fixed Asset Turnover:
Net Sales, divided by Net Property, Plant and Equipment	16.67		16.52		16.48		16.53		16.51
Total Asset Turnover:
Net Sales, divided Total Assets	3.11		3.10		3.12		3.14		3.15
3.    Liabilities Management:
Number of Days Cost of Goods Sold in Accounts Payable
Accounts Payable, divided by Cost of Goods Sold / 365	37.6		37.6		37.6		37.6		37.6
Number of Days Operating Expenses in Accrued Expenses:
Accrued Expenses, divided by Operating Expenses / 365	28.3		28.3		28.3		28.3		28.3
Current Maturities:
Current Maturities of Long Term Debt	$8		$9		$10		$11		$12
Long Term Liabilities, as % of Total Assets:
Total Long Term Liabilities, divided by Total Assets	23.6%		23.7%		23.8%		24.0%		24.1%
Total Liabilities, as % of Total Assets:
Total Liabilities, divided by Total Assets	70.2%		68.4%		66.4%		64.2%		62.1%
Debt-to-Worth Ratio:
Total Liabilities, divided by Owners' Equity	2.35		2.17		1.98		1.79		1.64
4.    Profitability Management:
Gross Margin on Sales:
Net Sales, minus Cost of Goods Sold	$188		$206		$227		$250		$275
Gross Margin %:
Gross Margin on Sales, divided by Net Sales	37.5%		37.5%		37.5%		37.5%		37.5%
Operating Earnings:
Gross Margin on sales, minus Operating Expenses	$18		$19		$21		$24		$26
Operating Earnings %:
Operating Earnings, divided by Net Sales	3.6%		3.5%		3.5%		3.6%		3.5%
Earnings Before Interest, Taxes, Depreciation and Amortization of Intangible Assets (Referred to as "EBITDA")
Net Earnings, plus Interest Expense, plus Income Tax Expense, plus Depreciation, plus Amortization of Intangible Assets ("EBITDA")	$20		$26		$29		$33		$36
EBITDA as % of Net Sales:
EBITDA, divided by Net Sales	4.0%		4.7%		4.8%		5.0%		4.9%
Earnings Before Income Taxes:
Net Earnings, plus Income Taxes	$14		$13		$15		$19		$20
Net Earnings Per Share:
Net Earnings, divided by Common Shares Outstanding	$0.08		$0.08		$0.09		$0.11		$0.12
Earnings Before Income Taxes as % of Net Sales:
Earnings Before Income Taxes, divided by Net Sales	2.8%		2.4%		2.5%		2.9%		2.7%
Net Earnings as % of Net Sales:
Net Earnings, divided by Net Sales	1.6%		1.5%		1.5%		1.7%		1.6%
5.    Debt Management:
Senior Interest Expense:
Interest on Line of Credit, plus Interest on Term Loan	$4		$6		$6		$5		$6
Non-Senior Interest Expense:
Interest on Subordinated Debt	$0		$0		$0		$0		$0
Total Interest Expense:
Senior Interest Expense, plus Non-Senior Interest Expense	$4		$6		$6		$5		$6
EBITDA Coverage of Senior Interest Expense:
EBITDA, divided by Senior Interest Expense	5.00		4.33		4.83		6.60		6.00
EBITDA Coverage of Total Interest Expense:
EBITDA, divided by Total Interest Expense	5.00		4.33		4.83		6.60		6.00
Required Debt Service:
Total Interest Expense, plus Current Maturities	$12		$15		$16		$16		$18
EBITDA Coverage of Required Debt Service:
EBITDA, divided by Required Debt Service	1.67		1.73		1.81		2.06		2.00
EBITDA minus Capex, divided By Required Debt Service:
EBITDA minus Capital Expenditures, divided by Required Debt Service	(1.33)		1.05		1.10		1.27		1.22
Free Cash Flow:
Net Earnings, plus Depreciation minus Capital Expenditures, minus Dividends	$(22)		$4		$5		$7		$7
Cash Available for Debt Service:
Free Cash Flow, plus Total Interest Expense	$(18)		$10		$11		$12		$13
Debt Service Coverage:
Cash Available for Debt Service, divided by Required Debt Service	(1.50)		0.71		0.72		0.78		0.77
6.    Estimated Bank Credit Availability:
Borrowing Base Assets:
Accounts Receivable	$40		$44		$48		$53		$58
Inventory	56		62		68		75		82
Property, Plant and Equipment (Net)	30		33		36		40		44
Estimated Borrowing Base %:
Accounts Receivable	80.0%		80.0%		80.0%		80.0%		80.0%
Inventory	35.0%		35.0%		35.0%		35.0%		35.0%
Property, Plant and Equipment	50.0%		50.0%		50.0%		50.0%		50.0%
Estimated Amount Available to Borrow:
Accounts Receivable	$32		$35		$38		$42		$46
Inventory	20		22		24		26		29
Property, Plant and Equipment	15		17		18		20		22
	$67		$74		$80		$88		$97
Loans Outstanding:
Line of Credit	$22		$21		$17		$13		$10
Current Maturities	8		9		10		11		12
Term Loan	32		35		38		42		46
	$62		$65		$66		$66		$68
Estimated Net Bank Borrowing Availability:
Estimated Amount Available to Borrow, minus Loans Outstanding	$5		$9		$14		$22		$29