FYI:

The Forecasted Sales= $165,000

Forecast Increase in Net Fixed Assets= $18,000

B. Using the existing financial statements as your basis, estimate firm XYZ's EFR for the forecast period again, but this time using the cookbook model . Assume that the profit margin remains the same in the forecast period. Also based on the cookbook equation, how much funding is expected to come from each of the internal sources of funds (change in SL and retained earnings). If firm XYZ must maintain a minimum current ratio of 1.8 and a maximum debt ratio of 0.50, how would you propose the EFR be financed (how much short term debt, long term debt, and equity)? XYZ Company Income Statement For the Year Ended 12/31/xxxx Sales Cost of Goods Sold Gross Profit Operating Expenses EBIT Interest Expense EBT Taxes a 39% Net Income Dividend Addition to Retained Earnings $140,000 117.000 23,000 12.830 10,170 4,610 5,560 2,168 3,392 1,018 $2,374 XYZ Company Balance Sheet 12/31/xxxx Assets Current Assets Cash Accounts Receivable Inventory Prepaid Items Other CA A Total Current Assets Net Plant & Equipment Total Assets $7,500 12.100 10,400 5.900 4.300 $40,200 82.300 $122,500 XYZ Company Balance Sheet 12/31/xxxx Liabilities & Equity Current Liabilities * Accounts Payable Wages Payable Notes Payable Taxes Payable Total Current Liabilities Long Term Debt Total Liabilities $7,200 3,600 5,400 4.200 $20,400 35.700 $56, 100 Common Stock Retained Earnings 28,700 37,700 Total Liabilities & Equity $122,500