CASE 1 (40 points)

The 2020 financial statements for Azimuth Corporation follow. Assets, costs, and current liabilities are proportional to sales. Long-term debt and equity are not. The company maintains a constant 40 percent dividend payout ratio. As with every other firm in its industry, next years sales are projected to increase by 15 percent. The firm is operating at full capacity and no new debt or equity is issued.

e) Assuming that the company operated at 90% capacity in 2020, re-calculate Proforma Total Assets in 2021.

f) How would you approach predicting next year's sales growth? Explain.

Income Statement Balance Sheet Sales $7.900 $ 3,900 $ 2.100 Current assets Fixed assets 5,500 8.600 3.700 Current liabilities Long-term debt Equity Total $2,400 Costs Taxable income Taxes (25%) Net income 6.700 600 Total $12.500 $12.500 $1.800