3(a) Assume the following ratios are constant: Total asset turnover 3.30 Profit margin 6.2 % Equity multiplier 1.50 Payout ratio 22 % What is the sustainable growth rate? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) Sustainable growth rate %

3(b)

Cheryl Colby, CFO of Charming Florist Ltd., has created the firms pro forma balance sheet for the next fiscal year. Sales are projected to grow by 20 percent to $450 million. Current assets, fixed assets, and short-term debt are 15 percent, 70 percent, and 5 percent of sales, respectively. Charming Florist pays out 20 percent of its net income in dividends. The company currently has $133 million of long-term debt and $61 million in common stock par value. The profit margin is 16 percent.

a.	Prepare the current balance sheet for the firm using the projected sales figure. (Enter your answers in dollars, not millions of dollars, i.e. 1,234,567. Do not round intermediate calculations and round your answers to the nearest whole dollar amount. (e.g., 32))

Balance Sheet
Assets			Liabilities and equity
(Click to select)Short-term debtLong-term debtAccounts receivableCurrent assetsCommon stockFixed assets	$		(Click to select)Common stockCurrent assetsAccounts payableAccumulated retained earningsShort-term debtLong-term debt	$
(Click to select)Common stockAccounts receivableFixed assetsShort-term debtCurrent assetsLong-term debt			(Click to select)Short-term debtCommon stockAccounts payableLong-term debtAccumulated retained earningsCurrent assets
			(Click to select)Accounts payableShort-term debtCommon stockLong-term debtCurrent assetsAccumulated retained earnings	$
			(Click to select)Accounts payableShort-term debtAccumulated retained earningsCommon stockLong-term debtCurrent assets
			Total equity	$
Total assets	$		Total liabilities and equity	$

b.

Based on Ms. Colbys sales growth forecast, how much does Charming Florist need in external funds for the upcoming fiscal year? (Enter your answer in dollars, not millions of dollars, i.e. 1,234,567. Do not round intermediate calculations and round your final answer to the nearest whole dollar amount. (e.g., 32))

External financing needed

$

c-1.	Prepare the firms pro forma balance sheet for the next fiscal year. (Enter your answers in dollars, not millions of dollars, i.e. 1,234,567. Do not round intermediate calculations and round your final answers to the nearest whole dollar amount. (e.g., 32))

Balance Sheet
Assets			Liabilities and equity
(Click to select)Accounts receivableAccumulated retained earningsLong-term debtCurrent assetsShort-term debtFixed assets	$		(Click to select)Accumulated retained earningsShort-term debtAccounts payableLong-term debtCurrent assetsCommon stock	$
(Click to select)Fixed assetsAccounts receivableShort-term debtCurrent assetsLong-term debtAccumulated retained earnings			(Click to select)Long-term debtAccumulated retained earningsCommon stockAccounts payableShort-term debtCurrent assets
			(Click to select)Short-term debtCurrent assetsLong-term debtCommon stockAccumulated retained earningsAccounts payable	$
			(Click to select)Short-term debtAccounts payableLong-term debtCurrent assetsAccumulated retained earningsCommon stock
			Total equity	$
Total assets	$		Total liabilities and equity	$

c-2.	Calculate the external funds needed. (Enter your answer in dollars, not millions of dollars, i.e. 1,234,567. Do not round intermediate calculations and round your final answer to the nearest whole dollar amount. (e.g., 32))

External financing needed

$

3(c)

In addition to common-size financial statements, commonbase year financial statements are often used. Commonbase year financial statements are constructed by dividing the current year account value by the base year account value. Thus, the result shows the growth rate in the account.

Prepare the common-size balance sheet and commonbase year balance sheet for the company. Use 2011 as the base year. (Do not round intermediate calculations. Round your common size answers to 2 decimal places. (e.g., 32.16) and common base year answers to 4 decimal places. (e.g., 32.1616))

	JARROW CORPORATION
		2011		Common size			2012		Common size			Common base year
Assets
Current assets
Cash		$8,914			%		$10,854			%			%
Accounts receivable		22,253			%		24,737			%			%
Inventory		38,622			%		43,597			%			%
Total		$69,789			%		$79,188			%			%
Fixed assets
Net plant and equipment		$217,170			%		$245,140			%
Total assets		$286,959			%		$324,328			%			%
Liabilities and Owners Equity
Current liabilities
Accounts payable		$42,698			%		$47,684			%			%
Notes payable		19,264			%		18,835			%			%
Total		$61,962			%		$66,519			%			%
Long-term debt		$25,800			%		$32,800			%			%
Owners' equity
Common stock and paid-in surplus		$39,800			%		$41,000			%			%
Retained earnings		159,397			%		184,009			%			%
Total		$199,197			%		$225,009			%			%
Total liabilities and owners' equity		$286,959			%		$324,328			%			%

3(d)

a.	Compute the future value of $1,000 compounded annually for 10 years at 9 percent. (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Future value

$

b.	Compute the future value of $1,000 compounded annually for 10 years at 12 percent. (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Future value

$

c.	Compute the future value of $1,000 compounded annually for 15 years at 9 percent. (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Future value

$

3(e)

Solve for the unknown interest rate in each of the following (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16)):

Present Value				Years		Interest Rate		Future Value
	$	280		5		%		$	372
		400		19					1,370
		43,000		20					238,809
		42,261		30					1,107,073

3(f)

Solve for the unknown number of years in each of the following (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16)):

	Present Value			Years	Interest Rate			Future Value
	$	570			8	%		$	1,293
		820			12				2,173
		18,500			18				343,880
		21,600			14				363,176