Additional Funds Needed Steven Textile's 2009 financial statement are shown below:

Suppose 2010 sales are projected to increase by 15% over 2009 sales. Use the forecasted financial statement method to develop a pro forma balance sheet and income statement for December 31, 2010. Use an interest rate of 10% on the balance of debt at the beginning of the year to compute interest (cash pays no interest). Use the pro forma income statement to determine the addition to retained earnings. Assume that the company was operating at full capacity in 2009, that it cannot sell off any of its fixed assets, and that any required financing will be borrowed as notes payable. Also, assume that assets, spontaneous liabilities, and operating costs are expected to increase by the same percentage as sales. Determine the additional fundsneeded.

Transcribed Image Text:

Balance Sheet as of December 31, 2009 Thousands of Dollars) Cash Receivables Inventories Accounts payable Accruals S 1,080 4,320 2,880 2.100 9,300 3,500 3,500 6.480 Notes payable Total current assetsS16,560 12,600 Total current liabilities Mortgage bonds Common stock Retained eamings Net fixed assets Tolal assels 529152 Total liabilities and equity $29160 Income Stao December 31, 2009 (Thousands of Dollars) Sales Operating costs $36,000 32.440 s 3,560 460 5 3,100 12402 Earnings belore interest and taxes Inturest Earnings before taxes Taxes (40%; Net income Dividends (45% Akdition to retained eamings $ 837 s 1,023