Question
Financing Deficit Garlington Technologies Inc.'s 2021 financial statements are shown below: Income Statement for December 31, 2021 Sales$4,000,000 Operating costs3,200,000 EBIT$ 800,000 Interest120,000 Pre-tax earnings$
Financing Deficit
Garlington Technologies Inc.'s 2021 financial statements are shown below:
Income Statement for December 31, 2021
Sales$4,000,000 Operating costs3,200,000 EBIT$ 800,000 Interest120,000 Pre-tax earnings$ 680,000 Taxes (25%)170,000 Net income510,000 Dividends$ 190,000 Balance Sheet as of December 31, 2021
Cash$ 160,000 Accounts payable$ 360,000 Receivables360,000 Line of credit0 Inventories720,000 Accruals200,000 Total CA$1,240,000 Total CL$ 560,000 Fixed assets4,000,000 Long-term bonds1,000,000 Total Assets$5,240,000 Common stock1,100,000 RE2,580,000 Total L&E$5,240,000 Suppose that in 2022 sales increase to $4.4 million and that 2022 dividends will increase to $156,000. Forecast the financial statements using the forecasted financial statement method. Assume the firm operated at full capacity in 2021. The long-term bonds have an interest rate of 11%. New financing will be with a line of credit. Assume it will be added at the end of the year. Cash does not earn any interest income. Enter your answers as positive values. Do not round intermediate calculations. Round your answers to the nearest dollar.
Garlington Technologies Inc. Pro Forma Income Statement December 31, 2022 Sales $ Operating costs $ EBIT $ Interest $ Pre-tax earnings $ Taxes (25%) $ Net income $ Dividends: $ Addition to RE: $
Garlington Technologies Inc. Pro Forma Balance Statement December 31, 2022 Cash $ Receivables $ Inventories $ Total current assets $ Fixed assets $ Total assets $ Accounts payable $ Line of credit $ Accruals $ Total current liabilities $ LT bonds $ Common stock $ Retained earnings $ Total L&E $
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