Work out a short-term financing plan for Dynamic Mattress Company, assuming the limit on the line of credit is raised from $100 to $120 million. Otherwise keep to the assumptions used in developing Table 29.6 (on page 741).

Visit us at www.mhhe.com/bma Income Statement Sales $1,000 (40% of average assets)*

Costs 750 (75% of sales)

Interest 25 (5% of debt at start of year)**

Pretax profit 225 Tax 90 (40% of pretax profit)

Net income $135 Balance Sheet Assets $2,600 Debt $500 Equity 2,100 Total $2,600 Total $2,600

◗ TABLE 29.11 Financial statements for Drake’s Bowling Alleys, 2011 (figures in thousands). See Problem 7.

* Assets at the end of 2010 were $2,400,000.

** Debt at the end of 2010 was $500,000.

Income Statement Sales $4,000 Costs, including interest 3,500 Net income $500 Balance Sheet, Year-end 2010 2009 2010 2009 Assets $3,200 $2,700 Debt $1,200 $1,033 Equity 2,000 1,667 Total $3,200 $2,700 Total $3,200 $2,700

◗ TABLE 29.12 Financial statements for Archimedes Levers, 2010. See Problem 8 and 9.

Visit us at www.mhhe.com/bma Chapter 29 Financial Planning 753 February March April Total sales $200 $220 $180 Purchases of materials For cash 70 80 60 For credit 40 30 40 Other expenses 30 30 30 Taxes, interest, and dividends 10 10 10 Capital investment 100 0 0

◗ TABLE 29.13 Selected budget data for Ritewell Publishers. See Problems 10.

February March April Sources of cash:

Collections on cash sales Collections on accounts receivables Total sources of cash Uses of cash:

Payments of accounts payable Cash purchases of materials Other expenses Capital expenditures Taxes, interest, and dividends Total uses of cash Net cash inflow Cash at start of period 100

 Net cash inflow

 Cash at end of period

 Minimum operating cash balance 100 100 100

 Cumulative short-term financing required

◗ TABLE 29.14 Cash budget for Ritewell Publishers. See Problems 10.

Current Assets: Current Liabilities:

Cash $ 20 Bank loans $ 20 Marketable securities 10 Accounts payable 75 Accounts receivable 110 Total current liabilities 95 Inventory 100 Total current assets 240 Long-term debt 25 Net worth (equity and retained earnings) 300 Fixed assets:

Gross investment 250 Less depreciation 70 Net fixed assets 180 Total assets 420 Total liabilities and net worth 420

◗ TABLE 29.15 Year-end balance sheet for Dynamic Mattress for 2007 (figures in $ millions).

See Problems 13.

Visit us at www.mhhe.com/bma 754 Part Nine Financial Planning and Working Capital Management AppendixLO1