How much will Mr. Butler need to borrow from the bank to finance his expected expansion in sales?

Forecasted sales for year 1991 is $3600 (in thousands). You will use the given forecasted as your next years sales. (I.e., estimate LOC under two different scenarios.)

To answer question 2, forecast the financial statements under two scenarios.

Forecast 1- Assume that firm will not issue any long-term debt or equity, estimate notes payable to the bank (LOC, line of credit) in 1991. (Using forecasted statements method and excel solver function as we did in class).

Forecast 2- Assume firm issues $35 (thousands) in long-term debt and $25 (thousands) in equity, estimate notes payable to the bank (LOC, line of credit) in 1991.

		Forecast 1	Forecast 2
Balance Sheet		1991 Forecasted	1991 Forecasted
Cash		55	55
Accounts receivable, net		424	424
Inventory		559	559
Current assets		1,037	1,037
Property, net		210	210
Total assets		1,247	1,247
Notes payable, bank		398	336
Notes Payable, trade		NA	NA
Acc. payable		342	342
Accruals		52	52
Long-term debt, current portion		7	7
Current liabilities		800	737
Long-term debt		50	85
Total liabilities		850	822
Net worth		397	424
Total liabilities and net worth		1,247	1,247
		Forecast 1	Forecast 2
Income statement		1991 Forecasted	1991 Forecasted
Net sales		$3,600	$3,600
COGS		2606	2606
Operating expense (b)		879	879
EBIT		115	115
Interest expense		49	46
Net income before taxes		$66	$69
Provision for income taxes (25%)		16	17
Net income		$49	$51