Question
ANSWER ALL THE FOLLOWING 1. XYZ Corporation financial statements for the most recent year are as follows: XYZ Corporation Income Statement XYZ Corporation Balance Sheet
ANSWER ALL THE FOLLOWING
1. XYZ Corporation financial statements for the most recent year are as follows:
XYZ Corporation Income Statement | XYZ Corporation Balance Sheet | |||||
Sales | $72,500 | Current Assets | $35,300 | Current Liabilities |
|
|
Less : Costs Less: Depreciation | $31,000 9,250 |
|
| A/Payable | $ 8,000 |
|
EBIT | $ 32,250 |
|
| Notes payable | $ 4,300 |
|
Less: Interest paid | $ 9,250 |
|
| Total | $ 12,300 |
|
Taxable Income
Less: Taxes (40%) Net Income | $ 23,000
9,200 13,800
| Fixed Assets | $57,500 |
Long-term debt
Equity | $25,500
55,000 |
|
Dividends (60%) | $ 8,280 |
|
|
|
|
|
Retained Earnings | $ 5,520 |
|
| Total |
|
|
|
| Total Assets | $92,800 | Total Liab & Equity | $ 92,800 |
|
A 15 % growth rate in sales is projected. Assuming:
- costs, all assets and A/Payable vary with sales,
- others items in balance sheet do not vary with sales,
- dividend payout ratio is constant.
- Tax rate is constant.
- Prepare the following pro forma financial statements (3 marks)
xyz Corporation Pro forma Income Statement | xyz Corporation Pro forma Balance Sheet | ||||
Sales |
| Current Assets |
| Current Liabilities |
|
Less : Costs
Less: Depreciation |
|
|
| A/Payable |
|
EBIT
Less: Interest paid |
|
|
| Notes payable |
|
Taxable Income
Less: Taxes (40%)
|
|
|
| Total Current Liabilities |
|
Net Income |
|
|
|
Long-term debt |
|
Dividends ( ) |
| Fixed Assets |
|
Equity
|
|
Retained Earnings |
| -- TOTAL ASSETS |
|
TOTAL LIAB & EQUITY |
|
- What is the external financing needed? (1 mark)
(1 mark)
- What are the ways you would suggest for the firm to finance its external fund requirement?
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