Executive Fruit\'s financial manager believes that sales in 2015 could rise by a
ID: 2477394 • Letter: E
Question
Executive Fruit's financial manager believes that sales in 2015 could rise by as much as 20% or by as little as 10%. Assets and costs change in proportion to sates, debt remains constant and no new equity financing occurs. Recalculate the first-stage pro forma financial statements under these two growth assumptions and calculate the required external financing (All figures are in thousands) (Enter your answers in thousands.) Assume any required external funds will be raised by issuing long-term debt and that any surplus funds will be used to retire such debt Prepare the completed (second-stage) pro forma balance sheet. (Enter your answers in thousands.)Explanation / Answer
Executive Fruit (All values in $ thousands) Income Statement Base 20% 10% Case Growth Growth Revenue 9500 11400 10450 Cost of Goods Sold 8550 10260 9405 EBIT 950 1140 1045 Interest 190 228 209 Earnings Before Taxes 760 912 836 State and Federal Tax 304 364.8 334.4 Net Income 456 547.2 501.6 Dividends 304 364.8 334.4 Retained Earnings 152 182.4 167.2 Balance Sheet Assets Net Working Capital 950 1140 1045 Fixed Assets 3800 4560 4180 Total Assets 4750 5700 5225 Liabilities and Shareholders' Equity Long Term Debt 1900 1900 1900 Shareholders' Equity 2850 3032.4 3199.6 Total Liabilities and Shareholders' Equity 4750 4932.4 5099.6 Required External Financing 767.6 125.4 Balance Sheet (Stage 2) Assets Net Working Capital 950 1140 1045 Fixed Assets 3800 4560 4180 Total Assets 4750 5700 5225 Liabilities and Shareholders' Equity Long Term Debt 1900 2667.6 2025.4 Shareholders' Equity 2850 3032.4 3199.6 Total Liabilities and Shareholders' Equity 4750 5700 5225
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.