Estate of James J. Renier, Deceased, Kent L. Renier and Dubuque Bank & Trust Company, Co-Executors - Page 21

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          spent $920,861 on inventory purchases and had operating expenses            
          of $363,304, for total expenditures of $1,284,165.  Thus,                   
          although Renier had outlays averaging over $107,000 per month in            
          fiscal 1989, Mr. Sliwoski assumed Renier would require less than            
          one-fourth of that amount as working capital.  This estimate is             
          unduly low, particularly in light of the fact that Renier paid              
          for its inventory with cash in order to take advantage of early             
          payment cash discounts offered by trade creditors.  Mr.                     
          Sliwoski’s estimates for the other years are no more reasonable.            
          Given the obvious shortcomings of Mr. Sliwoski’s working capital            
          estimates, we reject his methodology in favor of that used by Mr.           
          Kramer, which not only left sufficient working capital to cover             
          Renier’s operating expenses but also provided additional working            
          capital to purchase inventory with cash.  Based on Mr. Kramer’s             
          formula, as adjusted to account for the double-counted liability            
          of $137,038, we conclude that $104,584 should be subtracted from            
          Renier’s reported net income as a normalizing adjustment to                 
          account for the interest generated by its excess working capital.           
                           c. Spread for Cost-of-Goods-Sold Adjustment                
               The parties agree that for a number of years Renier had used           
          an incorrect inventory accounting system that overstated cost of            
          goods sold.  The errors in cost of goods sold were corrected by             
          means of adjustments to the 1993 and 1994 fiscal years, which               
          resulted in reported net income for those years that                        
          substantially exceeded amounts in the preceding 4 years.  The               

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