3

YOUR BIRTH DATE: MM/DD (only months and days NOT years) Pick the highest digit in your birth date. Set m to be equal to this number. Clearly state what m is! Financial Ratios and Growth: Company X is currently operating at full capacity. X would like to grow its sales at 25% in 2020. Here are the conditions that the company would like to satisfy in 2020: All variable costs, fixed costs, assets except Accounts Receivables will increase by 25%. X would like to cut the days' sales in receivables by m days from 2019 to 2020. Interest is 10% of the end-of-year long term as well as shrt term debt. Dividend payout ratio is 40%. No new stock will be issued. Whenever funds needed, short and long term debt will be raised equally. Income Statement and Balance Sheet of Company X as of end of 2019 are provided below as well as the Pro Forma Statements for 2020. Please find the accounts in the pro forma statements whose values are NOT correct and replace them with the correct ones. Please show your work and reasoning clearly. 2,019 2,000 1,200 2020 YOUR ANSWER 2,500 1,500 875 125 20 700 100 Sales Variable Costs Fixed Costs EBIT Interest EBT Taxes (40%) Net Income Dividends (40%) Additions to Retained Earnings 20 80 32 105 40 48 42 19.2 16.8 28.8 25.2 2019 20 240 2020 25 300 240 300 500 500 1,000 100 100 625 625 1,300 Cash and Securities Accounts Receivable Inventories Total Current Assets Net Fixed Assets Total Assets Accounts Payable Notes Payable Total Current Liabilities Long Term Debt Common Stock Retained Earnings Total Liabilities and Equity 125 200 100 500 100 225 100 500 225.2 1,050.2 200 1,000