Forecasted Statements and Ratios Upton Computers makes bulk purchases of small computers, stocks them in conveniently located warehouses, ships them to its chain of retail stores, and has a staff to advise customers and help them set up their new computers Upton's balance sheet as of December 31, 2019, is shown here (millions of dollars) Cash $3 5 Accounts payable $9 0 Receivables 26 0 Notes payable 18 0 Inventories 58 0 Line of credit 0 Total current assets $87 5 Accruals 8 5 Net fixed assets 35 0 Total current liabilities $35 5 Mortgage loan 6 0 Common stock 15 0 Retained earnings 66 0 Total assets $122 5 Total liabilities and equity $122 5 Sales for 2019 were $325 million and net income for the year was $9 75 million, so the firm's profit margin was 3 0 Upton paid dividends of $3 9 million to common stockholders, so its payout ratio was 40 Its tax rate was 25 , and it operated at full capacity Assume that all assets sales ratios, (spontaneous liabilities) sales ratios, the profit margin, and the payout ratio remain constant in 2020 Do not round intermediate calculations If sales are projected to increase by $81 25 million, or 25 , during 2020, use the AFN equation to determine Upton's projected external capital requirements Enter your answers in millions For example, an answer of $10,550,000 should be entered as 10 55 Round your answer to two decimal places Using the AFN equation, determine Upton's self supporting growth rate That is, what is the maximum growth rate the firm can achieve without having to employ nonspontaneous external funds Round your answer to two decimal places Use the forecasted financial statement method to forecast Upton's balance sheet for December 31, 2020 Assume that all additional external capital is raised as a line of credit at the end of the year and is reflected (because the debt is added at the end of the year, there will be no additional interest expense due to the new debt) Assume Upton's profit margin and dividend payout ratio will be the same in 2020 as they were in 2019 What is the amount of the line of credit reported on the 2020 forecasted balance sheets ( Hint You don't need to forecast the income statements because the line of credit is taken out on the last day of the year and you are given the projected sales, profit margin, and dividend payout ratio these figures allow you to calculate the 2020 addition to retained earnings for the balance sheet without actually constructing a full income statement ) Enter your answers in millions For example, an answer of $10,550,000 should be entered as 10 55 Round your answers to two decimal places Upton Computers Pro Forma Balance Sheet December 31, 2020 (Millions of Dollars) Cash Receivables Inventories Total current assets Net fixed assets Total assets Accounts payable Notes payable Line of credit Accruals Total current liabilities Mortgage loan Common stock Retained earnings Total liabilities and equity Financing Deficit Garlington Technologies Inc 's 2019 financial statements are shown below Income Statement for December 31, 2019 Sales $4,000,000 Operating costs 3,200,000 EBIT $ 800,000 Interest 120,000 Pre tax earnings $680,000 Taxes (25 ) 170,000 Net income 510,000 Dividends $190,000 Balance Sheet as of December 31, 2019 Cash $160,000 Accounts payable $360,000 Receivables 360,000 Line of credit 0 Inventories 720,000 Accruals 200,000 Total CA $1,240,000 Total CL $560,000 Fixed assets 4,000,000 Long term bonds 1,000,000 Total Assets $5,240,000 Common stock 1,100,000 RE 2,580,000 Total L E $5,240,000 Suppose that in 2020 sales increase to $4 6 million and that 2020 dividends will increase to $158,000 Forecast the financial statements using the forecasted financial statement method Assume the firm operated at full capacity in 2019 The long term bonds have an interest rate of 9 New financing will be with a line of credit Assume it will be added at the end of the year Cash does not earn any interest income Enter your answers as positive values Do not round intermediate calculations Round your answers to the nearest dollar Garlington Technologies Inc Pro Forma Income Statement December 31, 2020 Sales$Operating costs$EBIT$Interest$Pre tax earnings$Taxes (25 )$Net income$Dividends $Addition to RE $ Garlington Technologies Inc Pro Forma Balance Statement December 31, 2020 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 Projected Operating Assets Berman Jaccor Corporation's current sales and partial balance sheet are shown below This year Sales $1,000 Balance Sheet Assets Cash $ 100 Short term investments $ 90 Accounts receivable $ 150 Inventories $ 100 Total current assets $ 440 Net fixed assets $ 600 Total assets $1,040 Sales are expected to grow by 8 next year Assuming no change in operations from this year to next year, what are the projected total operating assets Do not round intermediate calculations Round your answer to the nearest dollar $ 977 8

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Forecasted Statements and Ratios Upton Computers makes bulk purchases of small computers, stocks them in conveniently located warehouses, ships them to its chain of retail

Forecasted Statements and Ratios

Upton Computers makes bulk purchases of small computers, stocks them in conveniently located warehouses, ships them to its chain of retail stores, and has a staff to advise customers and help them set up their new computers. Upton's balance sheet as of December 31, 2019, is shown here (millions of dollars):

Cash $3.5 Accounts payable $9.0

Receivables 26.0 Notes payable 18.0

Inventories 58.0 Line of credit 0

Total current assets $87.5 Accruals 8.5

Net fixed assets 35.0 Total current liabilities $35.5

Mortgage loan 6.0

Common stock 15.0

Retained earnings 66.0

Total assets $122.5 Total liabilities and equity $122.5

Sales for 2019 were $325 million and net income for the year was $9.75 million, so the firm's profit margin was 3.0%. Upton paid dividends of $3.9 million to common stockholders, so its payout ratio was 40%. Its tax rate was 25%, and it operated at full capacity. Assume that all assets/sales ratios, (spontaneous liabilities)/sales ratios, the profit margin, and the payout ratio remain constant in 2020. Do not round intermediate calculations.

If sales are projected to increase by $81.25 million, or 25%, during 2020, use the AFN equation to determine Upton's projected external capital requirements. Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55. Round your answer to two decimal places.
Using the AFN equation, determine Upton's self-supporting growth rate. That is, what is the maximum growth rate the firm can achieve without having to employ nonspontaneous external funds? Round your answer to two decimal places.
Use the forecasted financial statement method to forecast Upton's balance sheet for December 31, 2020. Assume that all additional external capital is raised as a line of credit at the end of the year and is reflected (because the debt is added at the end of the year, there will be no additional interest expense due to the new debt). Assume Upton's profit margin and dividend payout ratio will be the same in 2020 as they were in 2019. What is the amount of the line of credit reported on the 2020 forecasted balance sheets? (Hint:You don't need to forecast the income statements because the line of credit is taken out on the last day of the year and you are given the projected sales, profit margin, and dividend payout ratio; these figures allow you to calculate the 2020 addition to retained earnings for the balance sheet without actually constructing a full income statement.) Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55. Round your answers to two decimal places.

Upton Computers

Pro Forma Balance Sheet

December 31, 2020

(Millions of Dollars)

Cash:
Receivables:
Inventories:
Total current assets:
Net fixed assets:
Total assets:
Accounts payable:
Notes payable:
Line of credit:
Accruals:
Total current liabilities:
Mortgage loan:
Common stock:
Retained earnings:
Total liabilities and equity:

Financing Deficit

Garlington Technologies Inc.'s 2019 financial statements are shown below:

Income Statement for December 31, 2019

Sales $4,000,000

Operating costs 3,200,000

EBIT $ 800,000

Interest 120,000

Pre-tax earnings $680,000

Taxes (25%) 170,000

Net income 510,000

Dividends $190,000

Balance Sheet as of December 31, 2019

Cash $160,000 Accounts payable $360,000

Receivables 360,000 Line of credit 0

Inventories 720,000 Accruals 200,000

Total CA $1,240,000 Total CL $560,000

Fixed assets 4,000,000 Long-term bonds 1,000,000

Total Assets $5,240,000 Common stock 1,100,000

RE 2,580,000

Total L&E $5,240,000

Suppose that in 2020 sales increase to $4.6 million and that 2020 dividends will increase to $158,000. Forecast the financial statements using the forecasted financial statement method. Assume the firm operated at full capacity in 2019. The long-term bonds have an interest rate of 9%. 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, 2020Sales$Operating costs$EBIT$Interest$Pre-tax earnings$Taxes (25%)$Net income$Dividends:$Addition to RE:$

Garlington Technologies Inc.

Pro Forma Balance Statement

December 31, 2020

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:

Projected Operating Assets Berman & Jaccor Corporation's current sales and partial balance sheet are shown below. This year Sales $1,000 Balance Sheet: Assets Cash $ 100 Short-term investments $ 90 Accounts receivable $ 150 Inventories $ 100 Total current assets $ 440 Net fixed assets $ 600 Total assets $1,040 Sales are expected to grow by 8% next year. Assuming no change in operations from this year to next year, what are the projected total operating assets? Do not round intermediate calculations. Round your answer to the nearest dollar. $ 977 8