Access Sports

B C D E G L M N O P Access Sports & Orthopedics Access Sports & Orthopedics is a large for-profit orthopedic physician group. The practice has been growing rapidly due to an increasing number of overly aggressive college football and basketball players. A 2016 financial forecast is needed to see if the practice might need to negotiate an increase in its $1million, 10% interest, line of credit at a local bank. Operating data: (1) The physician group is currently operating at only 85% capacity since they recently accepted a new physician partner. (2) Average collection period for receivables is 60 days. (3) Payables are 40% of operating costs and average payment period for payables is 90 days. (4) Supplies inventory is equal to 20% of monthly revenues. (5) Payroll is 60% of operating costs and 1 month is typically accrued. (6) Fixed assets average 20% of revenues (7) Cost and other relationships with revenue are expected to remain stable. (8) A minimum cash balance of $200,000 is desired. 2015 Income Statement Balance Sheet December 31, 2015 Revenues $10,511,786.00 Cash $200,000 Accounts Payable $854,346 Operating Costs $8,543.455.00 Receivables $1,727,965 Note Payable $900,000 EBIT $1,968,331.00 Supplies $175,196 Payroll accruals $427,173 Interest $82,987.00 Total Current Assets $2,103,161 Total Current Liabilities $2,181,518 EBT $1,885,344.00 Common Stock $1,000,000 Taxes (40%) $754,137.60 Fixed Assets $2,102,357 Retained Earnings $1,024,000 Net Income $1,131,206.40 Dividends (90%) $1,018,085.76 Total Assets $4,205,518 Total Liabilities & Equity $4,205,518 Retained Earnings $113,120.64 Required: (1) Forecast the Income Statement and Balance Sheet for 2016 under the assumption that revenues will increase 12%. (2) Determine the amount, if any, of additional financing needed and evaluate the adequacy of the line of credit