***NEED THE FOMULAS USED IN EXCEL, NOT JUST THE SOLUTIONS***

Forecast Zeiber's 2017 income statement and balance sheets. Use the following assumptions: (1) Sales grow by 6%. (2) The ratios of expenses to sales, depreciation to fixed assets, cash to sales, accounts receivable to sales, and inventories to sales will be the same in 2017 as in 2016. (3) Zeiber will not issue any new stock or new long-term bonds. (4) The interest rate is 11% for long-term debt and the interest expense on long-term debt is based on the average balance during the year. (5) No interest is earned on cash. (6) Regular dividends grow at an 8% rate. (6) Calculate the additional funds needed (AFN). If new financing is required, assume it will be raised by drawing on a line of credit with an interest rate of 12%. Assume that any draw on the line of credit will be made on the last day of the year, so there will be no additional interest expense for the new line of credit. If surplus funds are available, pay a special dividend.

Key Input Data:			Used in the
			forecast
Tax rate			40%
Dividend growth rate			8%
Rate on notes payable-term debt, rstd			9%
Rate on long-term debt, rd			11%
Rate on line of credit, rLOC			12%
a. What are the forecasted levels of the line of credit and special dividends? (Hints: Create a column showing the ratios for the current year; then create a new column showing the ratios used in the forecast. Also, create a preliminary forecast that doesn't include any new line of credit or special dividends. Identify the financing deficit or surplus in this preliminary forecast and then add a new column that shows the final forecast that includes any new line of credit or special dividend.)
Begin by calculating the appropriate historical ratios in Column E. Then put these ratios and any other input ratios in Column G.
Forecast the preliminary balance sheets and income statements in Column H. Don't include any line of credit or special dividend in the preliminary forecast.
After completing the preliminary forecast of the balance sheets and income statement, go to the area below the preliminary forecast and identify the financing deficit or surplus. Then use Excel's IF statements to specify the amount of any new line of credit OR special dividend (you should not have a new line of credit AND a special dividend, only one or the other).
After specifying the amounts of the special dividend or line of credit, create a second column (I) for the final forecast next to the column for the preliminary forecast (H). In this final forecast, be sure to include the effect of the special dividend or line of credit.
Income Statements:			2016	2016 Historical ratios	Forecasting basis	2017 Input ratios	2017 Preliminary forecast (doesn't include special dividend or LOC)	2017 Final forecast (includes special dividend or LOC)
(December 31, in thousands of dollars)
Sales			$455,150		Growth
Expenses (excluding depr. & amort.)			$386,878		% of sales
Depreciation and Amortization			$14,565		% of fixed assets
EBIT			$53,708
Interest expense on long-term debt			$11,880		Interest rate x average debt during year
Interest expense on line of credit			$0
EBT			$41,828
Taxes (40%)			$16,731
Net Income			$25,097
Common dividends (regular dividends)			$12,554		Growth
Special dividends					Zero in preliminary forecast
Addition to retained earnings			$12,543
Balance Sheets			2016	2016 Historical ratios	Forecasting basis	2017 Input ratios	2017 Preliminary forecast (doesn't include special dividend or LOC)	2017 Final forecast (includes special dividend or LOC)
(December 31, in thousands of dollars)
Assets:
Cash			$18,206		% of sales
Accounts Receivable			$100,133		% of sales
Inventories			$45,515		% of sales
Total current assets			$163,854
Fixed assets			$182,060		% of sales
Total assets			$345,914
Liabilities and equity
Accounts payable			$31,861		% of sales
Accruals			$27,309		% of sales
Line of credit			$0		Zero in preliminary forecast
Total current liabilities			$59,170
Long-term debt			$120,000		Previous
Total liabilities			$179,170
Common stock			$60,000		Previous
Retained Earnings			$106,745		Previous + Addition to retained earnings
Total common equity			$166,745
Total liabilities and equity			$345,914
Identify Financing Deficit or Surplus
Increase in spontaneous liabilities (accounts payable and accruals)
+ Increase in long-term bonds, preferred stock and common stock
+ Net income (in preliminary forecast) minus regular common dividends
Increase in financing
Increase in total assets
Amount of financing deficit or surplus:
If deficit in financing (negative), show the amount for the line of credit
If surplus in financing (positive), show the amount of the special dividend
a. What are the forecasted levels of the line of credit and special dividends?
Required ine of credit							Note: we copied values from H99:H100 when sales growth in G51 = 6%.
Special dividends