Please help me forecast the following income and balance sheets for Ziebler Corp

Question

Please help me forecast the following income and balance sheets for Ziebler Corporation: 1.) Assume sales grow by 6%. 2.) The ratios of expenses to sales , depreciation to fixed assets, cash to sales, accounts receivable to sales and inventories to sales will be the same in 2014 as 2013. 3.) Ziebler will not issue any new stock or new long term bonds. 4.) The interest rate is 11% for long-term debth and interest expense onlong-term debt is based on the average balance during the year. 5.) No interest is earned on cash. 6.) Dividends grow at an 8% rate. Calculate the additional funds needed, (AFN.

2010:

Sales = $350.00

Net Income = 10.50

Profit Margin = 0.03%

Dividends Paid = 4.20

Payout Ratio = 40%

RR = 60%

2011

Sales Increase = 70.00

%increase =

Sales =

Profit Margin =

Net Income =

Profit ARatio =

Dividend Paid =

RR =

Please provide step by step calculations so I can learn. Thank you.

Explanation / Answer

Zieber Corporation's 2010 financial statements are shown below. Forecast Zeiber's 2011 income statement and balance sheets. Use the following assumptions: (1) Sales grow by 6%. (2) The ratios of expenses to sales, depreciation to fixed assets, cash to sales, accounts receivable to sales, and inventories to sales will be the same in 2011 as in 2010. (3) Zeiber will not issue any new stock or new long-term bonds. (4) The interest rate is 9% for short-term debt and 11% for long-term debt. (5) No interest is earned on cash. (6) Dividends grow at an 8% rate. (6) Calculate the additional funds needed (AFN). If new financing is required, assume it will be raised as notes payable. Assume that any new notes payable will be borrowed on the last day of the year, so there will be no additional interest expense for the new notes payable. If surplus funds are available, pay a special dividend. a. What are the forecasted levels of notes payable and special dividends? Key Input Data: Used in the forecast Tax rate 40% Dividend growth rate 8% S-T rd 9% L-T rd 11% December 31 Income Statements: (in thousands of dollars) Forecasting 2010 2011 2011 2010 basis Ratios Inputs Forecast Sales $455,150 Growth 6.00% $482,459 Expenses (excluding depr. & amort.) $386,878 % of sales 85.000% 85.00% $410,090 EBITDA $68,273 $72,369 Depreciation and Amortization $14,565 % of fixed assets 8.000% 8.00% $15,439 EBIT $53,708 $56,930 Net Interest Expense $11,880 Interest rate x beginning of year debt $13,200 EBT $41,828 $43,730 Taxes (40%) $16,731 $17,492 Net Income $25,097 $26,238 Common dividends (regular dividends) $12,554 Growth 8.00% $13,558 Special dividends $0 Addition to retained earnings (DRE) $12,543 $12,680 December 31 Balance Sheets (in thousands of dollars) Forecasting 2010 2011 2011 2010 basis Ratios Inputs Without AFN AFN With AFN Assets: Cash $18,206 % of sales 4.000% 4.000% $19,298 $19,298 Accounts Receivable $100,133 % of sales 22.000% 22.000% $106,141 $106,141 Inventories $45,515 % of sales 10.000% 10.000% $48,246 $48,246 Total current assets $163,854 $173,685 $173,685 Fixed assets $182,060 % of sales 40.000% 40.000% $192,984 $192,984 Total assets $345,914 $366,669 $366,669 Liabilities and equity Accounts payable $31,861 % of sales 7.000% 7.000% $33,772 $33,772 Accruals $27,309 % of sales 6.000% 6.000% $28,948 $28,948 Notes payable $0 Previous $0 $4,525 $4,525 Total current liabilities $59,170 $62,720 $67,245 Long-term debt $120,000 Previous $120,000 $120,000 Total liabilities $179,170 $182,720 $187,245 Common stock $60,000 Previous $60,000 $60,000 Retained Earnings $106,745 Previous + DRE $119,424 $119,424 Total common equity $166,745 $179,424 $179,424 Total liabilities and equity $345,914 $362,144 $366,669 $0.000 Total assets = $366,669 Planned liabilities and equity = $362,144 Additional funds needed (AFN) = $4,525 Required additional notes payable = $4,525 Special dividends $0 a. What are the forecasted levels of notes payable and special dividends? Required additional notes payable = $4,525 Note: we copied values from G73:G74 when sales growth in G30 = 6%. Special dividends $0 b. Now assume that the growth in sales is only 3%. What are the forecasted levels of notes payable and special dividends? Required additional notes payable = $0 Note: we copied values from G73:G74 when sales growth in G30 = 3%. Special dividends $3,111

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