Forecasted Financial Statements: Incorporating Financing Feedback We forecast the financial statements with these assumptions (most are the same as in Tab 1): (1) Operating ratios remain unchanged. (2) No additional notes payable, LT bonds, or common stock will be issued. (3) The interest rate on all debt is 10%. (4) If additional financing is needed, then it will be raised through a line of credit. The line of credit will be accessed smoothly throughout the year. The interest expense for the LOC will be based on its average balance during the year. (5) Interest expenses for notes payable and LT bonds are based on the average balances during the year. (6) If surplus funds are available, the surplus will be paid out as a special dividend payment. (7) Regular dividends will grow by 15%. (8) Sales will grow by 159%. This is called the "Steady" scenario because operations remain unchanged. The same assumptions apply to the Target scenario, except there are improvements in several areas of operations. Only 2 formulas must change to incorporate the financing feedback from the LOC. Change the LOC in cell H131 and change the LOC interest expense in cell H143. We explain these changes below. Use the Scenaro Manager to change scenarios. Inputs for Forecasts Hatfield Forecast Scenarios Active is 2012 Steady Target Steady Sales growth rate 15.0% 15.0% 15.0% 15.0% Operating costs/Sales 95.0% 95.0% 93.0% 95.0% Cash/Sales 1.0% 1.0% 1.0% 1.0% Receivables/Sales 14.5% 14.5% 11.0% 14.5% Inventories/Sales 19.5% 19.5% 15.0% 19.5% Fixed assets/Sales 25.0% 25.0% 23.0% 25.0% Payables and accruals/ Sales 5.0% 5.0% 4.0% 5.0% Growth rate in regular dividends 15.0% 15.0% 15.0% 15.0% Interest rate on all debt 10.0% 10.0% 10.0% 10.0% Tax rate 40.0% 40.0% 40.0% 40.0%