1 b. N - o 2 Informationen 3 EEM, Incorporated Balance Sheet as of 12/31/XO 4 Assets: Liabilities and Equity: 5 Cash $ 1,000.00 A/P $ 5,300.00 6 A/R $ 7,200.00 Bank note payable $ 3,200.00 7 Inventory $ 6,100.00 Equity $ 10,000.00 8 Long term assets $ 4,200.00 $ 18,500.00 9 $ 18,500.00 10 11 The estimated following relationships between sales and the various assets and liabilities that vary with level of sales: 12 13 A/R=$3,310 +0.35 sales 14 Inventory= $2,264 +0.28 sales 15 A/P= $1,329 +0.22 sales 16 17 a. If the firm expects sales of $25,000, what are the forecasted levels of the balance sheet items above? 18 19 20 21 22 23 b. Will the expansion in A/P cover the expansion in inventory and A/R? 24 25 26 27 28 29 c. If the firm earns 12%v on sales after taxes and retains all of these earnings, what is the forecasted equity? 30 31 32 33 34 35 d. Construct a new balance sheet that incorporates the issuing of additional short-term debt to cover any needs for 36 additional finance. If the firm has excess funds, add them to cash. 37 38