A. The company’s sales are projected to grow by 10% next year. Calculate the eff

Question

A.    The company’s sales are projected to grow by 10% next year. Calculate the effects and present the forecasted income statement and balance sheet for the company.

B.    Indicate the amount of external financing required by the company for next year.

Assets current prior Cash 12,000 11,400 Accounts Receivable 4,700 4,600 Inventory 24,200 13,000 Total Current Assets 40,900 29,000 Land 50,000 40,000 Building & Equipment 600,000 600,000 Less: Accumulated Depreciation - Building & Equipment (375,700) (320,000) Total Long Term Assets 274,300 320,000 Total Assets 315,200 349,000 Liabilities and Stockholders' Equity Accounts Payable 9,200 7,000 Salaries Payable 0 4,200 Interest Payable 3,000 0 Short Term Notes Payable 24,000 0 Taxes Payable 0 11,200 Total Current Liabilities 36,200 22,400 Bonds Payable 109,900 200,000 Total Long Term Liabilities 109,900 200,000 Common Stock 120,000 120,000 Retained Earnings 49,100 6,600 Total Stockholders' Equity 169,100 126,600 Total Liabilities and Stockholders' Equity 315,200 349,000 Felicia & Fred                      Income Statements For the Current and Prior Periods Ended 000s 000s current prior Revenue: 975,000 950,000 Less: Cost of Goods Sold (723,600) (749,000) Less: Depreciation Expense (55,700) (52,000) Gross Margin 195,700 149,000 Selling, General & Administrative Expenses (58,200) (64,000) Income Before Interest & Taxes 137,500 85,000 Interest Expense (15,000) (12,000) Income Before Taxes 122,500 73,000 Income Taxes (70,000) (60,000) Net Income 52,500 13,000

Explanation / Answer

Son't increase everything by 10%. Just increase the sales/revenues by 10% and the cost of goods sold by 10%, rest all keep them the same. In this way your net profit will differ.

External financing will be required up to the amount of the increase in the COGS.

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