(12-11)

Build a Model:

Forecasting Financial Statements Start with the partial model in the file Ch12 P11 Build a Model.xls on the textbook’s Web site, which shows Matthews Industries’s most recent balance sheet, income statement, and other data. Matthews Industries’s financial planners must forecast the company’s financial results for the coming year. The forecast will be based on the forecasted financial statement method, and any additional funds needed will be obtained by using notes payable. Complete the partial model and answer the following questions.

a. Assume that the firm’s 2010 profit margin, payout ratio, capital intensity ratio, and spontaneous liabilities-to-sales ratio remain constant. If sales grow by 10% in 2011, what is the required external capital the firm will need in 2011 as calculated by the AFN equation?