The following are the first stage and second stage pro forma financial statement
ID: 2723137 • Letter: T
Question
The following are the first stage and second stage pro forma financial statements of Executive Fruit Company for the year ended December 2015.
PRO FORMA INCOME STATEMENT, 2015
How would Executive Fruit’s financial model change if the dividend payout ratio were cut to 1/3?_________ Use the revised model to generate a new financial plan for 2015 assuming that debt is the balancing item. What would be the required external financing? (Do not round intermediate calculations.)
Dividends fall by $___________ . Therefore, the requirement for external financing falls from $___________ to $____________ . On the other hand, shareholders' equity will be increased by $__________________ .
The right-hand side of the balance sheet becomes (Do not round intermediate calculations. Enter your answers in thousands.):
The following is the financial statement of Executive Fruit Company for the year ended December 2014.Explanation / Answer
Dividends fall by $162 thousand . Therefore, the requirement for external financing falls from $ 2,088 thousand to $ 1,926 thousand . On the other hand, shareholders' equity will be increased by $ 3,024 thousand . The right-hand side of the balance sheet becomes (Do not round intermediate calculations. Enter your answers in thousands.): Long-term debt $ 1,926 Shareholders' equity $ 3,024 Total $ 4,950
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