Forecasting Financial Statements Common stock price $46.00 Earnings per share2021 $2.40 Total liabilities-to-assets ratio2021 Tax rate Dividends per share 2021 Growth rate of sales Common stock outstanding2021 Operating costs/sales ratio2021 Proportion of short-term interest-bearing debt 2021 Before-tax cost of debt a. Constructing the forecasted financial statements (Parts II., III., and IV.) $0.96 15% 100,000 87.5% 30% 30% 25% 11.50% Part II. Income Statements Sales Operating costs including depreciation Earnings before interest and taxes (EBIT) Interest Earnings before taxes (EBT) 2021 $3,840,000.00 2022 Formulas $0.00 BP3*(1+BH14) Taxes Net income (NI) Dividends Addition to retained earnings Part III. Balance Sheets Assets 3,497,968.00 $342,032.00 22,032.00 $320,000.00 80,000.00 $240,000.00 #AY #AY #NY #AY #AY #AY #AY #AY 2021 2022 Cash $192,000.00 #A/Y Receivables 384,000.00 #AY Inventories 768,000.00 #AY Total current assets $1,344,000.00 #AY Fixed assets 1,536,000.00 #AY Total assets $2,880,000.00 #AY Liabilities and Equity Accounts payable $384,000.00 #NY Accrued liabilities 192,000.00 #AY Receivables Part III. Balance Sheets Assets Cash 2021 $192,000.00 384,000.00 2022 #NY #NY Inventories 768,000.00 #NY Total current assets $1,344,000.00 #AVY Fixed assets 1,536,000.00 #NY Total assets $2,880,000.00 #AY Liabilities and Equity Accounts payable $384,000.00 #NY Accrued liabilities 192,000.00 #AY Notes payable 57,600.00 #AY Total current liabilities $633,600.00 #NY Long-term debt 126,000.00 #AY Total liabilities Common stock Retained earnings Total common equity $759,600.00 #AY 1,920,000.00 #NY 200,400.00 #AY $2,120,400.00 #A/Y Total liabilities and equity $2,880,000.00 #NY Part V Notes on Calculations Total liabilities Less: Payables and accruals Interest-bearing debt Allocated to notes payable Allocated to long-term bonds Interest expense Target equity-to-assets ratio Required total equity Retained earnings Required common stock #AY #AY #AY #AY #AY #AY #AY #NY #NY #NY b. Calculating the growth rate in sales at which the additional financing requirements will be exactly zero Profit margin Dividend payout ratio Addition to retained earnings 2021 Growth rate in sales 6.25% 40% Formulas. #AY #AY