1. Using the data in the student spreadsheet file Ethan Allen Financials.xlsx forecast the June .

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1. Using the data in the student spreadsheet file Ethan Allen Financials.xlsx forecast the June 30, 2017 income statement and balance sheet for Ethan Allen. Use the percent of sales method and the following assumptions: (1) sales in FY 2017 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 2017? Is this a surplus or deficit?

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.

c. Produce a chart of cash versus sales and add a trend line, Is cash a consistent percentage of sales? Does this fit your expectations?

d. Use the regression tool to verify your results from part c. Is the trend statistically significant? Use at least three methods from the regression output to show why or why not.

e. Turn off iteration and use the scenario the manager to set up three scenarios:

1. Best Case - Sales are 5% higher than expected.
2. Base Case - Sales are exactly as expected.
3. Worse Case - Sales are 5% less than Expected.

What is the DFN under each scenario ?