Central Perks Inc.

Income Statement

For the Year Ended Dec. $31,2019$

$20192018$

Sales $$3,946,250$ $$3,517,800$

Cost of Goods Sold $$3,331,250$ $$2,935,600$

Gross Profit $$615,000$ $$582,200$

Selling and G&A Expenses $$330,300$ $$240,000$

Fixed Expenses $$100,000$ $$100,000$

Depreciation Expense $$20,000$ $$18,900$

EBIT $$164,700$ $$223,300$

Interest Expense $$76,000$ $$62,500$

Earnings Before Taxes $$88,700$ $$160,800$

Taxes $$35,480$ $$64,320$

Net Income $$53,220$ $$96,480$

Notes:

Tax Rate $40\%$

Sales history Revenue COGS Forecast

$2015$ $$1,937,795$ $$1,609,455$

$2016$ $$2,150,952$ $$1,738,086$

$2017$ $$2,409,066$ $$2,042,210$

$2018$ $$3,517,800$ $$2,935,600$

$2019$ $$3,946,250$ $$3,331,250$

Central Perks Inc.

Income Statement

For the Year Ended Dec. $31,2019$

$20192018$

Sales $$3,946,250$ $$3,517,800$

Cost of Goods Sold $$3,331,250$ $$2,935,600$

Gross Profit $$615,000$ $$582,200$

Selling and G&A Expenses $$330,300$ $$240,000$

Fixed Expenses $$100,000$ $$100,000$

Depreciation Expense $$20,000$ $$18,900$

EBIT $$164,700$ $$223,300$

Interest Expense $$76,000$ $$62,500$

Earnings Before Taxes $$88,700$ $$160,800$

Taxes $$35,480$ $$64,320$

Net Income $$53,220$ $$96,480$

Notes:

Tax Rate $40\%$

Sales history Revenue COGS Forecast

$2015$ $$1,937,795$ $$1,609,455$

$2016$ $$2,150,952$ $$1,738,086$

$2017$ $$2,409,066$ $$2,042,210$

$2018$ $$3,517,800$ $$2,935,600$

$2019$ $$3,946,250$ $$3,331,250$

The Income statement and balance sheet for Central Perks Inc. are

provided here. Note that firm's capital expenditures are expected to rise by $$50,000$ in the new year. This will lead to an increase of $$5,000$ in depreciation expense from $2019.$ Sales next year should be $$4,407,500,$ and the dividend payment to common stockholders will equal the dividend payment in $2019.$ Cost of Goods Sold, S$,$G&A Expense, Interest Expense, Accounts Receivable, Inventory, Accounts Payable, and Other Current Liabilities will vary with sales. Cash, Notes Payable, Long$-$Term Debt, and Common Stock will remain the same as in $2019.$

$1.$ Using the information given and percentage of sales analysis techniques where appropriate, prepare a pro forma income statement and balance sheet for the next year. Since both $2018$ and $2019$ financial statements are given, use the average percentage of sales from both years. Calculate the amount of financing needed for the balance sheet.

$2.$ Create a chart of sales by year for all years, including your pro forma estimate.

$3.$ Add a trend line.

$4.$ Create a scatter plot of sales vs$.$ cogs. Add a trend line.

$5.$ Regress cogs against sales $($do not include the $2010$ estimates$).$

$6.$ Using your sales trendline and annual sales data forecast the sales level in the next $3$ years $(3$ years after the year with $4\mathrm{.}3$M in sales$).$ Forecast using the trend line as well as at least one of the following: trend, linest, regression.