Dahlia Colby, CFO of Charming Florist Ltd., has created the firm's pro forma balance sheet for the

Question:

Dahlia Colby, CFO of Charming Florist Ltd., has created the firm's pro forma balance sheet for the next fiscal year. Sales are projected to grow by 10 percent to $360 million. Current assets, fixed assets, and short-term debt are 20 percent, 75 percent, and 15 percent of sales, respectively. Charming Florist pays out 30 percent of its net income in dividends. The company currently has $105 million of long-term debt and $46 million in common stock par value. The profit margin is 9 percent.

a. Construct the current balance sheet for the firm using the projected sales figure.

b. Based on Ms. Colby's sales growth forecast, how much does Charming Florist need in external funds for the upcoming fiscal year?

c. Construct the firm's pro forma balance sheet for the next fiscal year and confirm the external funds needed that you calculated in part (b).

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...