2013 financial statements of Zieber Corporation. Forecast Zeiber's 2014 income statement and balance sheets. Use the following assumptions: (1) Sales grow by 5.5%. (2) The ratios of expenses to sales, depreciation to fixed assets, cash to sales, accounts receivable to sales, and inventories to sales will be the same in 2014 as in 2013. (3) Zeiber will not issue any new stock or new long-term bonds. (4) The interest rate is 13% for long-term debt and the interest expense on long-term debt is based on the average balance during the year . (5) No interest is earned on cash. (6) Dividends grow at an 6.5% rate. (6) Calculate the additional funds needed (AFN). If new financing is required, assume it will be raised by drawing on a line of credit with an interest rate of 12%. Assume that any draw on the line of credit will be made on the last day of the year, so there will be no additional interest expense for the new line of credit. If surplus funds are available, pay a special dividend.
a. What are the forecasted levels of notes payable and special dividends?
Key Input Data:			Used in the
			forecast
Tax rate			40.0%
Dividend growth rate			6.5%
Rate on notes payable-term debt, rstd			8.0%
Rate on long-term debt, rd			13.0%
Rate on line of credit, rLOC			12.0%
December 31 Income Statements:
(in thousands of dollars)
				Forecasting	2013	2014	2014
			2013	basis	Ratios	Inputs	Forecast
Sales			$455,150	Growth		Answer=	Answer=
Expenses (excluding depr. & amort.)			$386,878	% of sales	Answer=	Answer=	Answer=
Depreciation and Amortization			$14,565	% of fixed assets	Answer=	Answer=	Answer=
EBIT			$53,708				Answer=
Interest expense on long-term debt			$11,880	Interest rate x average debt during year			Answer=
Interest expense on line of credit			$0				Answer=
EBT			$41,828				Answer=
Taxes (40%)			$16,731				Answer=
Net Income			$25,097				Answer=
Common dividends (regular dividends)			$12,554	Growth		6.50%	Answer=
Special dividends						Answer=	Answer=
Addition to retained earnings (DRE)			$12,543				Answer=
December 31 Balance Sheets
(in thousands of dollars)
			Forecasting	2013	2014		2014
		2013	basis	Ratios	Inputs	Without adj.	Adj.	With Adj.
Assets:
Cash		$18,206	% of sales	Answer=	Answer=	Answer=		Answer=
Accounts Receivable		$100,133	% of sales	Answer=	Answer=	Answer=		Answer=
Inventories		$45,515	% of sales	Answer=	Answer=	Answer=		Answer=
Total current assets		$163,854				Answer=		Answer=
Fixed assets		$182,060	% of sales	Answer=	Answer=	Answer=		Answer=
Total assets		$345,914				Answer=		Answer=
Liabilities and equity
Accounts payable		$31,861	% of sales	Answer=	Answer=	Answer=		Answer=
Accruals		$27,309	% of sales	Answer=	Answer=	Answer=		Answer=
Line of credit		$0	Previous			Answer=	Answer=	Answer=
Total current liabilities		$59,170				Answer=		Answer=
Long-term debt		$120,000	Previous			Answer=		Answer=
Total liabilities		$179,170				Answer=		Answer=
Common stock		$60,000	Previous			Answer=		Answer=
Retained Earnings		$106,745	Previous + DRE			Answer=		Answer=
Total common equity		$166,745				Answer=		Answer=
Total liabilities and equity		$345,914				Answer=		Answer=
Increase in spontaneous liabilities (accounts payable and accruals)						Answer=
+ Increase in long-term bonds, preferred stock and common stock						Answer=
+ Net income minus regular common dividends						Answer=
Increase in financing						Answer=
Increase in total assets						Answer=
Amount of deficit or surplus financing:						Answer=
If deficit in financing (negative), draw on line of credit						Answer=
If surplus in financing (positive), pay special dividend						Answer=
a. What are the forecasted levels of the line of credit and special dividends?
Required ine of credit						Answer=	Note: we copied values from G78:G79 when sales growth in G32 = 6%.
Special dividends						Answer=
b. Now assume that the growth in sales is only 3%. What are the forecasted levels of line of credit and special dividends?
Required ine of credit						Answer=	Note: we copied values from G78:G79 when sales growth in G32 = 3%.
Special dividends						Answer=