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Executive Fruits financial manager believes that sales in 2015 could rise by as much as 20% or by as little as 10%. Assets and costs

Executive Fruits financial manager believes that sales in 2015 could rise by as much as 20% or by as little as 10%. Assets and costs change in proportion to sales, debt remains constant, and no new equity financing occurs.

a.

Recalculate the first-stage pro forma financial statements under these two growth assumptions and calculate the required external financing (All figures are in thousands). (Enter your answers in thousands.)

Base Case 20% Growth 10% Growth
INCOME STATEMENT
Revenue $ 11,500 $ $
Cost of goods sold 10,350
EBIT $ 1,150 $ $
Interest 230
Earnings before taxes $ 920 $ $
State and federal tax 368
Net income $ 552 $ $
Dividends 368
Retained earnings $ 184 $ $
BALANCE SHEET
Assets
Net working capital $ 1,150 $ $
Fixed assets 4,600
Total assets $ 5,750 $ $
Liabilities and shareholders' equity
Long-term debt $ 2,300 $ $
Shareholders' equity 3,450
Total liabilities and shareholders' equity $ 5,750 $ $
Required external financing $ $

b.

Assume any required external funds will be raised by issuing long-term debt and that any surplus funds will be used to retire such debt. Prepare the completed (second-stage) pro forma balance sheet. (Enter your answers in thousands.)

BALANCE SHEET
Base Case 20% Growth 10% Growth
Assets
Net working capital $ 1,150 $ $
Fixed assets 4,600
Total assets $ 5,750 $ $
Liabilities and shareholders' equity
Long-term debt $ 2,300 $ $
Shareholders' equity 3,450
Total liabilities and shareholders' equity $ 5,750 $ $

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