Hello Please see the two attachments for the questions. One attachment is the questions. the other attachment is the data required to answer the questions.

MGMT 332 - Module 2 Case Study Martin Manufacturing Company Income Statement For the Year Ended December 31, 2014 Sales revenue Less: Cost of goods sold Gross Profit Less: Operating expenses Selling expense General and administrative expenses Depreciation expense Total operating expense Operating profit Less: Interest expense Net profit before taxes Less: Income Taxes Net profit $5,075,000 3,704,000 $1,371,000 $650,000 416,000 152,000 1,218,000 153,000 93,000 60,000 24,000 $ 36,000 *Preferred stock dividends of $3,000 were paid. **EPS for common stock is $0.33 Page 1 of 2 MGMT 332 - Module 2 Case Study Martin Manufacturing Company Balance Sheet December 31, 2014 Assets Current assets: Cash Accounts receivable Inventory Total current assets $ 25,000 805,556 700,625 $1,531,181 Gross fixed assets (at cost) $2,093,819 Less: Accumulated depreciation 500,000 Net Fixed assets 1,593,819 Total assets $3,125,000 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 230,000 Notes payable 311,000 Accruals 75,000 Total Current Liabilities $ 616,000 Long-term debt Total liabilities $1,165,250 $1,781,250 Stockholders' Equity Preferred stock (2,500 Shares) $ 50,000 Common stock (100,000 Shares @ $4.00 par) 400,000 Paid in capital 593,750 Retained earnings 300,000 Total Stockholders' Eq 1,343,750 Total Liabilities and Stockholders' Equity $3,125,000 ***The firm's 100,000 outstanding shares of common stock closed 2014 at a price of $11.38 Per share. Data Table: Projected financial data for 2015: Sales revenue Minimum cash balance Inventory turnover (times) Average collection period Fixed-asset purchases Total dividend payments Depreciation expense Interest expense Accounts payable increase Accruals and long-term debt Notes payable, preferred and Common stock $6,500,000 25,000 7.0 50 days 400,000 20,000 185,000 97,000 20% Unchanged unchanged Page 2 of 2 Preparing Martin Manufacturing's 2015 Pro Forma Financial Statements. To improve its competitive position, Martin Manufacturing is planning to implement a major equipment modernization program. Included will be replacement and modernization of key manufacturing equipment at a cost of $400,000 in 2015. The planned program is expected to lower the variable cost per unit of finished product. Terri Spiro, an experienced budget analyst, has been charged with preparing a forecast of the firm's 2015 financial position, assuming replacement and modernization of manufacturing equipment. She plans to use the 2014 financial statements, along with the key projected financial data summarized in the attached table. Respond to the following: 1. Use the historical and projected financial data provided to prepare a pro forma income statement for the year ended December 31, 2015. (Hint: Use the percent of sales method to estimate all values except depreciation and interest expense, which have been estimated by management and included in the table.) 2. Use the projected financial data along with relevant data from the pro forma income statement prepared in part (1) to prepare the pro forma balance sheet at December 31, 2015. (Hint: Use the judgmental approach.) 3. Will Martin Manufacturing Company need to obtain external financing to fund the proposed equipment modernization program? Explain