Pro Forma Balance Sheet: EFG Co. expected to have its sales increased from $150
ID: 2743657 • Letter: P
Question
Pro Forma Balance Sheet: EFG Co. expected to have its sales increased from $150 million to $250 million in year 2015. The company’s total assets (including all of the current assets and fixed assets), accounts payables and accruals will increase with the sales. The projected added to retained earnings is $50 million, and there is no change in common stock.
Use Pro Forma balance sheet to calculate (project) the value of the additional funding that the company would need to support its sales in year 2015.
To earn credit, you must use Pro Forma method in the calculations, and you must show your calculation result of each balance sheet account and the additional funding needed!!
2014 Balance Sheet (Millions of $)
Cash
80.00
Accounts payables
70.00
Accounts receivable
120.00
Notes payables
100.00
Inventories
300.00
Accruals
30.00
Total CA
500.00
Total CL
200.00
Fixed assets
400.00
Long-term debt
100.00
Common stock
400.00
Retained Earnings
200.00
Total assets
900.00
Total liabilities and equity
900.00
2014 Balance Sheet (Millions of $)
Cash
80.00
Accounts payables
70.00
Accounts receivable
120.00
Notes payables
100.00
Inventories
300.00
Accruals
30.00
Total CA
500.00
Total CL
200.00
Fixed assets
400.00
Long-term debt
100.00
Common stock
400.00
Retained Earnings
200.00
Total assets
900.00
Total liabilities and equity
900.00
Explanation / Answer
Increase in assets is by a factor = 250/150
Total assets = 900*250/150 = 1500
Account payables and accruals worth in 2014 - 70 + 30 = 100
In 2015 it is expected to increase by a factor of 250/150
Account receivables + accrual 2015 = 100*250/150 = 167'
common stock = 400
Retained earnings = 200 + 50
Total liabilites and equity exclusing debt and notes payable = 167 + 400 + 250 = 817
Debt and notes payable = total assets - liability and equity without the notes and debt
= 1500 - 817 = 683
Notes payable and debt in 2014 = 100 + 100
Additional funding required = 683 - 200 = 483
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