4. Larime Corp. is forecasting 20X2 near the end of 20X1. The estimated year-end financial statements and
Question:
4. Larime Corp. is forecasting 20X2 near the end of 20X1. The estimated year-end financial statements and a worksheet for the forecast follow.
Management expects the following next year.
• An 8% increase in revenue.
• Price cutting will cause the cost ratio (COGS/sales) to deteriorate (increase) by 1% (of sales) from its current level.
• Expenses will increase at a rate that is three quarters of that of sales.
• The current accounts will increase proportionately with sales.
• Net fixed assets will increase by $5 million.
• All interest will be paid at 12%.
• Federal and state income taxes will be paid at a combined rate of 43%.
Make a forecast of Larime’s complete income statement and balance sheet.
Work to the nearest thousand dollars.
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