Stevens Textile\'s 2015 financial statements are shown below: Balance Sheet as o
ID: 2471074 • Letter: S
Question
Stevens Textile's 2015 financial statements are shown below:
Balance Sheet as of December 31, 2015 (Thousands of Dollars)
Income Statement for December 31, 2015 (Thousands of Dollars)
Suppose 2016 sales are projected to increase by 10% over 2015 sales. Use the forecasted financial statement method to forecast a balance sheet and income statement for December 31, 2016. The interest rate on all debt is 11%, and cash earns no interest income. Assume that all additional debt in the form of a line of credit is added at the end of the year, which means that you should base the forecasted interest expense on the balance of debt at the beginning of the year. Use the forecasted income statement to determine the addition to retained earnings. Assume that the company was operating at full capacity in 2015, that it cannot sell off any of its fixed assets, and that any required financing will be borrowed as notes payable. Also, assume that assets, spontaneous liabilities, and operating costs are expected to increase by the same percentage as sales. Determine the additional funds needed. Round your answers to the nearest whole number. Do not round intermediate calculations. Enter your answer in thousands of dollars.
What is the resulting total forecasted amount of the line of credit? Round your answers to the nearest whole number. Do not round intermediate calculations. Enter your answer in thousands of dollars.
Notes payable (including line of credit) $
Explanation / Answer
ANS;
Pro Forma Income Statement
December 31, 2013
(Thousands of Dollars)
Forecast Pro Forma
2006 Basis 2007
Sales $36,000 1.15 Sales06 $41,400
Operating costs $32,440 0.9011 Sales07 37,306
EBIT $ 3,560 $ 4,094
Interest 460 0.10 Debt06 560
EBT $ 3,100 $ 3,534
Taxes (40%) 1,240 1,414
Net income $ 1,860 $ 2,120
Dividends (45%) $ 837 $ 954
Addition to RE $ 1,023 $ 1,166
Stevens Textiles
Pro Forma Balance Sheet
December 31, 2013
(Thousands of Dollars)
Forecast Pro Forma
Basis % after
2006 2007 Sales Additions Pro Forma Financing Financing
Cash $ 1,0800 0.0300 $ 1,242 $ 1,242
Accts receivable 6,480 0.1883 7,452 7,452
Inventories 9,000 0.2005 10,350 10,350
Total curr.
assets $16,560 $19,044 $19,044
Fixed assets 12,600 0.3500 14,490 14,490
Total assets $29,160 $33,534 $33,534
Accounts payable $ 4,320 0.1200 $ 4,968 $ 4,968
Accruals 2,880 0.0800 3,312 3,312
Notes payable 2,100 2,100 +2,128 4,228
Total current
liabilities $ 9,300 $10,380 $12,508
Long-term debt 3,500 3,500 3,500
Total debt $12,800 $13,880 $16,008
Common stock 3,500 3,500 3,500
Retained earnings 12,860 1,166* 14,026 14,026
Total liabilities
and equity $29,160 $31,406 $33,534
AFN = $ 2,128
*From income statement.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.