1. Using the data in the student spreadsheet file Ethan Allen Financials.xlsx forecast the 2019 income statement and balance sheet for Ethan Allen. Use the percent of sales method and the following assumptions: (1) sales in FY 2019 will be $797.3359; (2) the tax rate will be 35%; (3) each item that changes with sales will be the five-year average percentage of sales; (4) net fixed assets will increase to $300; and (5) the common dividend will be $0.75 per share. Use your judgment on all other items.

a. What is the discretionary financing needed in 2019? Is this a surplus or deficit?

Ethan Allen Interiors Inc.
Income Statement (Industrial)
All figures in millions of U.S. Dollar, except per share items
	Jun '18	Jun '17	Jun '16	Jun '15	Jun '14
Sales	794.202	754.600	746.659	729.083	729.373
Cost of Goods Sold (COGS) incl. D&A	351.966	343.437	340.163	330.734	339.085
Gross Income	442.236	411.163	406.496	398.349	390.288
SG&A Expense	353.057	345.229	336.860	337.912	340.676
EBIT (Operating Income)	89.179	65.934	69.636	60.437	49.612
Interest Expense	1.618	5.957	7.540	8.778	9.020
Other Income - Net	0.395	1.206	0.306	-1.485	0.562
Unusual Expense - Net	0.000	4.500	0.000	0.000	-0.085
Pretax Income	87.956	56.683	62.402	50.174	41.239
Income Taxes	31.319	19.541	19.471	17.696	-8.455
Net Income	56.637	37.142	42.931	32.478	49.694
EPS (recurring)	2.00	1.38	1.47	1.11	1.71
EPS (diluted)	2.00	1.27	1.47	1.11	1.71
Diluted Shares Outstanding	28.32	29.18	29.28	29.24	29.11
Total Shares Outstanding	27.75	28.41	28.93	28.91	28.84
Dividends per Share	0.62	0.50	0.40	0.36	0.30
Payout Ratio	31.00	39.37	27.21	32.43	17.54
EBITDA	108.53	85.08	87.57	78.45	68.19
EBIT	89.18	65.93	69.64	60.44	49.61
Depreciation & Amortization Expense	19.35	19.14	17.93	18.01	18.58
Source : FactSet Fundamentals

b. Assume that the DFN will be absorbed by long-term debt and that the interest rate is 4% of LTD. Set up an iterative worksheet to eliminate it.