Listen PROFORMA ASSUMPTIONS: Below is Athleta's financial statements for 2018 and 2019. Proforma year is 2020. Athleta expects that sales in 2020 will increase by 13 percent. The company is planning to expand its operations to new cities in 2020. . For the planned expansion, Athleta received $1,700 additional long-term loan from J.P. Morgan Chase and will use this loan to finance the purchase of a new office building. .Salaries are expected be $113. The market conditions will lead COGS will be 10 percent lower than the 2019 level. When projecting the 2020 balance sheet, Athleta believed that the accounts receivable days will be 7 days higher than ACP days of last year. Inventory days will remain unchanged from 2019 Accounts payable dollar amount will remain unchanged from 2019 since the business has recently been rewarded with extended payment terms from its suppliers going forward. Current maturities of long-term debt (CMLTD), minimum cash ratio (i.e. Cash/NS) and dividend payments will remain same as in 2019. Tax rate is 14 percent. Proforma Net Income will be $794. Interest rate for long-term loan in 2020 is projected to be 4 percent. Interest expense on short term debt is delayed until 2021 (this means apply the interest rate only on long-term debt). Rental expense would be $6 per month. Depreciation expense would be the same percentage of gross fixed assets as was in 2019. INCOME STATEMENT 2018 2019 Net sales 1,316 1,658 Cost of goods sold 332 673 90 100 Salaries Rental expenses 26 18 Depr. Expense 12 30 Interest expense 560 338 Tax expense 48 71 Net income (loss) 248 428 BALANCE SHEET 2018 2019 Cash 26 20 Accounts receivable 72 82 Inventory 85 78 Total Current Assets 183 180 GFA 1,138 1,575 Accd depre 110 140 Net fixed assets 1,028 1,435 Total Assets 1,211 1,615 Accounts payable 39 52 Bank line of credit 0 225 Current portion due on term loan 70 70 Total Current Liabilities 109 347 Long-term debt 875 805 Total Liabilities 984 1,152 Total equity Total Liabilities and Equity 227 463 1,211 1,615 CASE 1 TA(w/ min cash) TL(w/ ST-0)+TE PLUG-TA (w/ min cash)-[TL(w/ ST-0)+TEJ>0 CASE 2.A: If interest expense is NOT linked to ST-debt CASE 2.B: If interest expense is linked to ST-dabs Solution: Cash min Cash ST-debt PLUG (no need to use the "IF" statement) Solution: Cash min Cash ST-debt IF(PLUG>0, PLUG, 0) What is the proforma line of credit (short-term bank loan) in 2020? Hint: You do NOT need to use the Excel's "IF" function to solve this question. Hide hint for Question 17 A/ PROFORMA SOLUTIONS CASE 1 TA(w/ min cash) 0