BHM, Inc. has the following balance sheet: BHM, Incorporated Balance Sheet as of 12/31/XO Assets Liabilities and Equity Cash $ 1,600 Accounts payable $14,300 Marketable securities 2,200 Accruals 4,000 Accounts receivable 12,500 Bank loan payable 6,100 Inventory 15,060 Long-term debt 19,835 Plant and equipment 34,975 Common stock 9,000 Retained earnings 13,100 $66,335 8 $66,335 Sales are currently $80,000 but are expected to fall to $60,000, which will require a contraction of assets. Since the firm is contracting, management would like to retire the long-term debt; however, the terms of the issue do not permit a partial repayment. Management would like to retain the short-term bank loan, but the bank will not renew the loan if the renewal results in the firm having a current ratio of less than 2:1. Since the firm is contracting, management would like to increase the marketable securities by $1,500 to meet emergencies. However, if the firm needs funds to retire debt, management is willing to liquidate all the marketable securities. The firm's historical profit margin on sales of 12 percent and the firm's policy of distributing 20 percent of earnings will be maintained. To help forecast the firm's future financial position, fill in all the anticipated entries in the following balance sheet using the percentage of sales applied to accounts receivable, inventory, accounts payable, and accruals prior to any change in the firm's debt structure. Some of the numbers have been provided, and since the entries are anticipated, the sum of the two sides need not be balanced. Do not round intermediate calculations. Round your answers to the nearest dollar. Enter your answers as positive values. 10,725 BHM, Incorporated Balance Sheet as of 12/31/XD Assets Liabilities and Equity Cash $ 1,600 Accounts payable $ Marketable securities Accruals Accounts receivable Bank loan payable Inventory Long-term debt Plant and equipment Common stock Retained earnings The projected - Salact amount is $ a. Can the firm retain the short-term bank loan? Round your answer to two decimal places. The forecasted current ratio is Since it is so at 2:1, the firm Scoat renew the short-term bank loan. b. Can the firm retire the long-term debt? -Salact The management will have funds to retire the entire amount of long-term debt. C. If the firm distributed no dividends and retained all of its earnings, could the firm retire the long-term debt? Round your answers to the nearest dollar The total amount raised (including dividends and marketable securities) is $ and it would be -Select- to retire the long-term debt. According to the previous answers, the management should -Select- Construct a new pro forma balance sheet that incorporates all the anticipated changes in the assets, liabilities, and equity assuming that the firm pays the dividend. to the existing cash. Round your answers to the nearest dollar. If the answer is zero, enter "0". BHM, Incorporated Balance Sheet as of 12/31/X1 Assets Liabilities and Equity Cash $ $ Accounts payable Marketable securities Accruals Accounts receivable Bank loan payable Inventory Long-term debt Plant and equipment Common stock Retained earnings $ $ BHM, Inc. has the following balance sheet: BHM, Incorporated Balance Sheet as of 12/31/XO Assets Liabilities and Equity Cash $ 1,600 Accounts payable $14,300 Marketable securities 2,200 Accruals 4,000 Accounts receivable 12,500 Bank loan payable 6,100 Inventory 15,060 Long-term debt 19,835 Plant and equipment 34,975 Common stock 9,000 Retained earnings 13,100 $66,335 8 $66,335 Sales are currently $80,000 but are expected to fall to $60,000, which will require a contraction of assets. Since the firm is contracting, management would like to retire the long-term debt; however, the terms of the issue do not permit a partial repayment. Management would like to retain the short-term bank loan, but the bank will not renew the loan if the renewal results in the firm having a current ratio of less than 2:1. Since the firm is contracting, management would like to increase the marketable securities by $1,500 to meet emergencies. However, if the firm needs funds to retire debt, management is willing to liquidate all the marketable securities. The firm's historical profit margin on sales of 12 percent and the firm's policy of distributing 20 percent of earnings will be maintained. To help forecast the firm's future financial position, fill in all the anticipated entries in the following balance sheet using the percentage of sales applied to accounts receivable, inventory, accounts payable, and accruals prior to any change in the firm's debt structure. Some of the numbers have been provided, and since the entries are anticipated, the sum of the two sides need not be balanced. Do not round intermediate calculations. Round your answers to the nearest dollar. Enter your answers as positive values. 10,725 BHM, Incorporated Balance Sheet as of 12/31/XD Assets Liabilities and Equity Cash $ 1,600 Accounts payable $ Marketable securities Accruals Accounts receivable Bank loan payable Inventory Long-term debt Plant and equipment Common stock Retained earnings The projected - Salact amount is $ a. Can the firm retain the short-term bank loan? Round your answer to two decimal places. The forecasted current ratio is Since it is so at 2:1, the firm Scoat renew the short-term bank loan. b. Can the firm retire the long-term debt? -Salact The management will have funds to retire the entire amount of long-term debt. C. If the firm distributed no dividends and retained all of its earnings, could the firm retire the long-term debt? Round your answers to the nearest dollar The total amount raised (including dividends and marketable securities) is $ and it would be -Select- to retire the long-term debt. According to the previous answers, the management should -Select- Construct a new pro forma balance sheet that incorporates all the anticipated changes in the assets, liabilities, and equity assuming that the firm pays the dividend. to the existing cash. Round your answers to the nearest dollar. If the answer is zero, enter "0". BHM, Incorporated Balance Sheet as of 12/31/X1 Assets Liabilities and Equity Cash $ $ Accounts payable Marketable securities Accruals Accounts receivable Bank loan payable Inventory Long-term debt Plant and equipment Common stock Retained earnings $ $
