t t+1 t+2 t+3Sales 985 1040 1236 1305.1Cost of goods 748.6 774.8 928.2 978.8Gross margin 236.4 265.2 307.8 326.3Administrative 169.4 202.8 236.1 249.3Depreciation 10.8 11.4 13.6 14.4EBIT 56.2 51 58.1 62.6Interest 7 6 5 4EBT 49.2 45 53.1 58.6Taxes 19.7 18.0 21.2 23.4Net income 29.5 27.0 31.9 35.2

EXHIBIT 1HOLLY FASHIONS' Income Statement -- t - t+3 (000s)

t t+1 t+2 t+3ASSETSCash 40.4 51.9 38.6 10.6Receivables 153.2 158.9 175.1 224.8Inventory 117 121.1 193.4 191.9Other current assets 5.9 6.2 7.4 7.8Current assets 316.5 338.1 414.5 435.1Gross fixed 44.8 58.9 78.1 96.4Accumulated depreciation 12 23.4 37 51.4Net fixed 32.8 35.5 41.1 45Total assets 349.3 373.6 455.6 480.1

LIABILITIES & NET WORTHAccounts payable 53.8 54.7 86.2 84.2Debt due 10 10 10 10Accruals 19.7 26 24.7 26.1Current liabilities 83.5 90.7 120.9 120.3Long-term debt 60 50 40 30Common stock 150 150 180 180Retained earnings 55.8 82.8 114.6 149.8Total L&NW 349.3 373.5 455.5 480.1

EXHIBIT 2Balance Sheet of the HOLLY FASHIONS company -- t - t+3

t t+1 t+2 t+3 Industry average t - t+3*liquidity ratios current 3.8 3.7 3.4 3.6 2.6 1.7 1.3 quick 2.4 2.4 1.8 2.0 1.6 0.8 0.6leverage ratios debt% 41% 38% 35% 31% 41% 57% 71% times interest earned 8.0 8.5 11.6 15.7 7.4 3.9 1.3activity ratios inventory turnover 8.4 8.6 6.4 6.8 8.1 6 3.5 fixed assets turnover 30.0 29.3 30.1 29.0 40 25 12 total assets turnover 2.8 2.8 2.7 2.7 3.5 2.8 2 average collection period 56 55 51 62 41 50 68 day purchases outstanding (average payment period) **26 25 33 31 18 25 32profitability ratios gross margin 24.0% 25.5% 24.9% 25.0% 28% 26% 24% net profit margin 3.0% 2.6% 2.6% 2.7% 4.20% 3.10% 1.20% return on equity 14.3% 11.6% 10.8% 10.7% 27.30% 19.50% 7.80% return on total assets 8.5% 7.2% 7.0% 7.3% 11.80% 8.70% 3.40%operating margin *** 6.8% 6.0% 5.8% 5.9% 9.90% 7.20% 3.10%

EXHIBIT 3FINANCIAL RATIOS FOR THE HOLLY FASHION COMPANY -- t - t+3

q1 q2 q3 q4worst bad good great