- 3. (10) You are considering opening a wholesale furniture store and want to know the approximate structure your balance sheet should have. The ratios of other furniture stores are shown below: Current Liabilities: $150,000 Current ratio: 2.0 times Inventory turnover (based on sales) 8.0 times Average collection period (based on 360-day Year): 50 days Fixed asset turnover: 2.5 times Debt/Asset ratio: 60% After making a market survey, you have estimated sales to be $1,000,000 in the first year. Using the financial ratios above, fill in the pro forma balance sheet to see what your asset and financial requirements will be. (15 points) Cash Current Liabilities AR Long-term Debt Inventory Total Liabilities Tot. Curr. Assets Fixed Assets Common Equity Total Liabilities & Owners' Equity Total Assets 2007 4. a. (15) Crum Co's balance sheet and income statement for 2007 are given below. The firm expects sales to grow by 50% in 2008. All assets, operating costs, and spontaneous liabilities will increase in proportion to sales. The company plans to finance any additional funds needed using debt at an interest rate of 10%. What is the company's projected funds needed for 2008? Assume interest expenses are 10% of the beginning of year debt balance. ($357.80) 2008 Sales $1,000 Operating costs 800 EBIT 200 Interest 16 EBT 184 Taxes (40%) 73.6 Net Income 110.40 Dividends (60% 66.24 Addn. To RE 44.16 30 Cash A/R Inventories Total CA Gross FA Accum.Depreciation Net FA 150 200 380 700 80 620 Total assets 1000 200 A/P and accruals 150 Debt Common stock 150 Retained Earnings 500 Total Liab.& Equity 1000 b. (15) Construct the Year 2008 Statement of Cash Flows for Crum. (CFO=$108, CFI= -$350, CFF=$257)