)

Item15

13points

Time Remaining 9 minutes 59 seconds

00:09:59

eBook

Item 15

Time Remaining 9 minutes 59 seconds

00:09:59

Cholesterol Dairy Products has plants in five provinces and operates a very large home delivery service. Sales last year were $100 million, and the balance sheet at year-end is similar in percent of sales to that of previous years (and this will continue in the future). All assets and current liabilities will vary directly with sales. Assume the firm is already using capital assets at full capacity.

Balance Sheet (in $ millions)AssetsLiabilities and Shareholders' EquityCash$5Accounts payable$6Accounts receivable10Accrued wages4Inventory25Accrued taxes2Current assets$40Current liabilities$12Capital assets40Long-term debt15 Common stock20 Retained earnings33Total assets$80Total liabilities and shareholder's equity$80

The firm has an aftertax profit margin of 8 percent and a dividend payout ratio of 25 percent.

a. If sales grow by 20 percent next year, determine how many dollars of new funds are needed to finance the expansion. (Enter the answer in millions. Round the final answer to 3 decimal places.)

The firm needs $ million in external funds.

b. Prepare a pro forma balance sheet with any financing adjustment made to long term debt. (Input all answers as positive values. Be sure to list the assets and liabilities in order of their liquidity. Enter the answers in millions. Round the final answers to 3 decimal places.)

Balance Sheet ($ millions)AssetsLiabilities and Shareholders' EquityCurrent assetsCurrent liabilities

(Click to select) Accounts receivable Cash Capital Asset Prepaid expenses Inventory $ (Click to select) Common stock Accrued wages Accrued taxes Retained earnings Accounts payable $ (Click to select) Accounts receivable Prepaid expenses Capital Asset Cash Inventory (Click to select) Accrued wages Retained earnings Accounts payable Common stock Long-term debt (Click to select) Gross plant Accounts receivable Prepaid expenses Cash Inventory (Click to select) Accrued taxes Retained earnings Accounts payable Common stock Long-term debt Current assets$ Current liabilities$ (Click to select) Inventory Cash Accrued wages Accounts Receivable Capital Assets (Click to select) Long-term debt Accrued wages Accounts payable Accrued taxes (Click to select) Common stock Accrued wages Accounts payable Accrued taxes $ (Click to select) Retained earnings Accrued wages Accounts payable Accrued taxes Total assets$

Total liabilities and shareholders' equity

$

c. Calculate the current ratio and total debt to assets ratio for each year. (Round the final answers to 2 decimal places.)

Year 1Year 2Current ratio X XTotal debt / assets % %

Item13

13points

Time Remaining 9 minutes 4 seconds

00:09:04

eBook

Item 13

Time Remaining 9 minutes 4 seconds

Assume the following data for Interactive Technology and Silicon Software.

Interactive Technology (IT)Silicon Software (SS) Net income$32,400 $169,000 Sales 351,000 2,630,000 Total assets 458,000 984,000 Total debt 200,000 472,000 Shareholders equity 258,000 512,000

a-1. Compute return on shareholders equity. (Do not round intermediate calculations. Round the final answers to 2 decimal places.)

Return on Shareholders equity Interactive Technology (IT) % Silicon Software (SS) %

a-2. Not available in connect.

b. Compute the following ratios for both firms (Round the final answers to 2 decimal places.)

Interactive Technology (IT)Silicon Software (SS) Net income / Sales % % Net income / Total assets % % Sales / Total assets X X Debt / Total assets % %