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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Larime Corp. Projected Income Statement ($000) 20x2 % $ % 20X1 $ Revenue $245,622 100.0 COGS 142,461 58.0 Gross margin $103,161 42.0 Expenses $ 49,124 20.0 EBIT $ 54,037 22.0 Interest (12%) 9,642 3.9 EBT $ 44,395 18.1 Income tax (43%) 19,090 7.8 EAT $ 25,305 10.3 Larime Corp. Projected Balance Sheet (S000) 20x1 20x2 100.0 20X1 20x2 ASSETS Current assets $178,106 Current liabilities LIABILITIES & EQUITY $ 85,700 Fixed assets 142,128 Debt 78,178 Total $320,234 Equity Total 156,356 $320,234