This spreadsheet assignment is an extension of the spreadsheet assignment given in Chapter 20, part (1). Refer back to the instructions given in Chapter 20. If you completed the spreadsheet assignment for Chapter 20, that spreadsheet can form the foundation for this assignment.

1. In addition to preparing forecasted financial statements for 2012 and 2013, Skywalker also wishes to prepare forecasted financial statements for 2014, 2015, and 2016. All assumptions applicable to 2012 and 2013 are assumed to be applicable to the subsequent years. Refer back to Chapter 13, part (1), for an explanation of each of the assumptions. Sales in each year are expected to be 40% higher than sales in the year before. [Note: For this part of the assignment, use the original 107.6-day value for the number of days’ sales in inventory; ignore the change assumed in (2) of the Chapter 20 assignment.] Clearly state any additional assumptions that you make.

2. As a company matures, it expects to generate enough cash from its operating activities to pay for a significant portion of its investing activities. Comment on whether it appears that Skywalker will reach that condition between 2011 and 2016.

3. Repeat (1), with the following changes in assumptions:

Average collection period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   9.06 days
Number of days’ sales in inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  66.23 days
Fixed asset turnover . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  3.989 times
Gross profit percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.55%
Other operating expenses/sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.86%
Number of days’ purchases in accounts payable . . . . . . . . . . . . . . . . . . . . . 50.37 days

4. Discuss why Skywalker has a projected current ratio of less than 2.0 in some years when using the ratios in (3).

5. Which company would you rather loan money to: a company with the projected financial statements prepared in (1) or a company with the projected financial statements prepared in (3)? Explain your answer.