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Fill out the balance sheet Create pro forma financial statements from the information provided below Year 1 Sales revenues increase 3.5% Gross margin is 50%
Fill out the balance sheet
Create pro forma financial statements from the information provided below | |||||||||
Year 1 | |||||||||
Sales revenues increase 3.5% | |||||||||
Gross margin is 50% | |||||||||
SG&A increases 1.2% | |||||||||
$2000 of PP&E is purchased on January 1, | |||||||||
New PP&E is depreciated over 10 years | |||||||||
Inventory grows in line with COGS | |||||||||
Assume that all other asset accounts grow in line with sales (3.5%). | |||||||||
Accounts Payable grow in line with COGS | |||||||||
Accrued and deferred income taxes grows in line with taxes. | |||||||||
Long-term debt declines by $200 | |||||||||
Unless otherwise stated, liability accounts grow in line with sales (3.5%) | |||||||||
Treasury Stock purchases equal $300 | |||||||||
Average interest cost of all interest bearing debt is 1.6% | |||||||||
Dividend payout ratio is 22% | |||||||||
Tax rate is 35% | |||||||||
Funding requirements should be financed with short-term debt | |||||||||
Y2 | |||||||||
Sales revenue decline by 2.0% | |||||||||
Gross margin declinesto 48% | |||||||||
Inventory grows in line with COGS | |||||||||
SG&A declines by 1% | |||||||||
$800of PP&E is sold on January 1 for $600 cash. (Gross =$800, Accumulated depreciation = $200) | |||||||||
Annual depreciation expense declines by $ 80 | |||||||||
Assume that all other asset accounts grow in line with sales. (-2.0%) | |||||||||
Accounts Payable grow in line with COGS | |||||||||
Long-term debt declines by $150 | |||||||||
Accrued and deferred income taxes grows in line with taxes. | |||||||||
Unless otherwise stated, liability accounts grow in line with sales (-2.0%) | |||||||||
Treasury Stock purchase is $100. | |||||||||
Average interest cost of all interest bearing debt is 1.8% | |||||||||
Dividend payout ratio changes to 25% | |||||||||
Tax rate is 35% | |||||||||
Funding requirements should be financed with short-term debt | |||||||||
Excess cash is used to retire short-term debt | |||||||||
100 shares of $1 par value common stock is issued for $300. | |||||||||
Do not add significant amounts to cash unless Loans & notes payable is drawn down to zero. |
Income Statement | ||||
Year 0 | Year 1 | Year 2 | ||
Revenues | 17,000 | 17,595 | 17,251 | |
Cost of goods sold | 9,200 | 9,538 | 9,349 | |
Gross profit | 7,800 | 8,057 | 7,902 | |
SG&A | 4,790 | 4,846 | 4,797 | |
Depreciation | 1,700 | 1,700 | 1,620 | |
Operating Profit | 1,310 | 1,511 | 1,485 | |
Interest expense | 155 | 24 | 27 | |
Income before taxes | 1,155 | 1,487 | 1,458 | |
Taxes @35% | 404 | 520 | 510 | |
Net Income | 751 | 967 | 948 | |
Dividends | 225 | 213 | 237 | |
Addition to retained earnings | 526 | 754 | 711 |
Balance Sheet | ||||
Assets | ||||
Year 0 | Year 1 | Year 2 | ||
Cash and cash equivalents | 640 | |||
Marketable securities | 28 | |||
Accounts Receivables | 8,200 | |||
Inventory | 3,142 | |||
Prepaid expen. & other assets | 1,323 | |||
Total Current Assets | 13,333 | |||
Plant property and equipment (gross) | 7,607 | |||
Accumulated Depreciation | 3,000 | |||
PP&E (net) | 4,607 | |||
Total Assets | 17,940 |
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