1. Prepare a preliminary forecast for 2023
without special dividends or line or credit
2. Prepare final forecast for 2023 with special dividends
or line or credit
Given:
sales growth		8%
ratios of expenses to sales
depreciation to fixed assets
cash to sales
accounts receivable to sales
inventories to sales
no issuance of new stock or new long term debt
interest rate		12%
regular dividends grow		6%
tax rate		25%
2021 ratios will be used for 2022 inputs
		Forecast
Tax rate		25%
Dividend growth rate		6%
Rate on notes payable-term debt, rstd		9%
Rate on long-term dbt, rd		10%
Rate on lin of credit, rLOC		12%
Income Statements:		2022
(December 31, in thousands of dollars)
Sales		$ 600,000
Expenses (excluding depr. & amort.)		$ 450,000
Depreciation and Amortization		$ 45,000
EBIT		$ 105,000
Interest expense on long-term debt		$ 12,000
Interest expense on line of credit		$ -
EBT		$ 93,000
Taxes (25%)		$ 23,250
Net Income		$ 69,750
		$ -
Common dividends (regular dividends)		$ 10,000
Special dividends		$ -
Addition to retained earnings		$ 59,750
Balance Sheets		2022
(December 31, in thousands of dollars)
Assets:
Cash		$ 10,000
Accounts Receivable		$ 75,000
Inventories		$ 80,000
Total current assets		$ 165,000
Fixed assets		$ 250,000
Total assets		$ 415,000
Liabilities and equity
Accounts payable		$ 30,000
Accruals		$ 20,000
Line of credit		$ -
Total current liabilities		$ 50,000
Long-term debt		$ 120,000
Total liabilities		$ 170,000
Common stock		$ 160,000
Retained Earnings		$ 57,000
Total common equity		$ 217,000
Total liabilities and equity		$ 387,000