Income Statement Year 1 Year 2 Revenues Cost of goods sold Gross profit SGOA Depreciation Operating Profit Interperse Income before taxes Tag: 35 Net Income Year Ol Year +++ 9.200 7,800 4,790 1,700 1310 65 1,155 404 751 Year 1 Year 2 188 Dividends Addition to ratanod earnings 563 Balance Sheet Assets Create pro forma linancial statements from the information provided below Year 1 Yea 1 Statement of Retained Earnings Year 2 om zid Sales revenues ncrease 3.2% Gross marginis 49.5% Beginning retained earnings SG&A cecreases by 25%. +Net Income $3000 of PPE is purchased on January 1, New PPBE is depreciated over 10 years -dividends Inventory grows at the same rate as the growth in COGS Ending retained earnings Assume that all other asset accounts grov stthe same rate as seles. Accounts Payable grow at the same rate as COGS Accrued and deterredincome talles govs at the same rate as tako ponse. Statement of Cash Flows Long-term debe increases by $1500 Unless otherwise stated liabilty accounts grow as the same rate as sales Treasury Stock purchases oqual 1900 Net Income Average interest cost of al interest bearing debtis 2.5%. Dudend payout ratio is 30%. + Depreciation Tax rate is 35% + (increase) decrease in A.R. Funding requirements should be linanced vith short-term debu + increase) decrease in inventory + (increase) decrease in prepaid exp. Year 1 + + increase (decrease) in A.P. Year 2 considY2 Sales revenue decline by 15%. + increase (decrease) in accrued taxes Gross margin inoreases to 50% + increase (decrease) in deferred taxes Invertolygions in Ine with COGS SG&A increases by 15% 800 of PPBE(net) is sold on January 1for 4800 cash(Gross - 41000 Accumulated depreciation200) =Cash Flow from operations Annual depreciation expense decines by $60 Assume that allother asset accounts change at the same rate as sales. Accounts Payable grow charge at the same rate as OOGS + increase) decrease in marketable sec. Long-term debt declines by $150 + increase) decrease in PPE Accrued and deferred income tanes change the same rate as tan pense. Unless otherwise stated, liabilty accounts change at the same rate as sales Treasury Stock purchase is $200 =Cash Flow from investing Average interest oost of all interest beating debtis 2.12 Year 1 Dudend payout radio changes to 22% Year 2 som ir Taurate is 35% increase (decrease) in loans and notes. 200 shares of #1par value common stock is issued for 1800. increase (decrease) in LTD Excess cach is used to retire short-term debt Do not add significant amounts to cash unles: Loans & notes payable drawn down to zero. + increase (decrease) in common stock dividends - treasury stock Yezar Yeo 640 .28 0 200 3,142 1.222 +4447 Cash and each equivalents Marketable seourties Account Peceivables Inventory Prepaid erpen. & other assets Total Current Assets Plark properly and equipment (gross) Accumulated Depreciation PPBE net! 7,607 3.000 4,607 Total Assets H+ Liabilities & Shareholders' Equity Accounts payable Loans & notes payable (plug) Aoorued income tanes Total Current Liabilities Year 0 Year 3 148 2.423 1.322 6.693 Long term debe Defered income taxes 2 800 155 =Cash flow from financing Shareholders' Equity Common Stock at par Cap al Susplus Retained earrings Less treasury stock Total equity 860 863 8.429 1100 0.062 Beginning cash +Change in cash Ending cash Total liabilities & shareholder equity *** Income Statement Year 1 Year 2 Revenues Cost of goods sold Gross profit SGOA Depreciation Operating Profit Interperse Income before taxes Tag: 35 Net Income Year Ol Year +++ 9.200 7,800 4,790 1,700 1310 65 1,155 404 751 Year 1 Year 2 188 Dividends Addition to ratanod earnings 563 Balance Sheet Assets Create pro forma linancial statements from the information provided below Year 1 Yea 1 Statement of Retained Earnings Year 2 om zid Sales revenues ncrease 3.2% Gross marginis 49.5% Beginning retained earnings SG&A cecreases by 25%. +Net Income $3000 of PPE is purchased on January 1, New PPBE is depreciated over 10 years -dividends Inventory grows at the same rate as the growth in COGS Ending retained earnings Assume that all other asset accounts grov stthe same rate as seles. Accounts Payable grow at the same rate as COGS Accrued and deterredincome talles govs at the same rate as tako ponse. Statement of Cash Flows Long-term debe increases by $1500 Unless otherwise stated liabilty accounts grow as the same rate as sales Treasury Stock purchases oqual 1900 Net Income Average interest cost of al interest bearing debtis 2.5%. Dudend payout ratio is 30%. + Depreciation Tax rate is 35% + (increase) decrease in A.R. Funding requirements should be linanced vith short-term debu + increase) decrease in inventory + (increase) decrease in prepaid exp. Year 1 + + increase (decrease) in A.P. Year 2 considY2 Sales revenue decline by 15%. + increase (decrease) in accrued taxes Gross margin inoreases to 50% + increase (decrease) in deferred taxes Invertolygions in Ine with COGS SG&A increases by 15% 800 of PPBE(net) is sold on January 1for 4800 cash(Gross - 41000 Accumulated depreciation200) =Cash Flow from operations Annual depreciation expense decines by $60 Assume that allother asset accounts change at the same rate as sales. Accounts Payable grow charge at the same rate as OOGS + increase) decrease in marketable sec. Long-term debt declines by $150 + increase) decrease in PPE Accrued and deferred income tanes change the same rate as tan pense. Unless otherwise stated, liabilty accounts change at the same rate as sales Treasury Stock purchase is $200 =Cash Flow from investing Average interest oost of all interest beating debtis 2.12 Year 1 Dudend payout radio changes to 22% Year 2 som ir Taurate is 35% increase (decrease) in loans and notes. 200 shares of #1par value common stock is issued for 1800. increase (decrease) in LTD Excess cach is used to retire short-term debt Do not add significant amounts to cash unles: Loans & notes payable drawn down to zero. + increase (decrease) in common stock dividends - treasury stock Yezar Yeo 640 .28 0 200 3,142 1.222 +4447 Cash and each equivalents Marketable seourties Account Peceivables Inventory Prepaid erpen. & other assets Total Current Assets Plark properly and equipment (gross) Accumulated Depreciation PPBE net! 7,607 3.000 4,607 Total Assets H+ Liabilities & Shareholders' Equity Accounts payable Loans & notes payable (plug) Aoorued income tanes Total Current Liabilities Year 0 Year 3 148 2.423 1.322 6.693 Long term debe Defered income taxes 2 800 155 =Cash flow from financing Shareholders' Equity Common Stock at par Cap al Susplus Retained earrings Less treasury stock Total equity 860 863 8.429 1100 0.062 Beginning cash +Change in cash Ending cash Total liabilities & shareholder equity ***