PART 2. PRO-FORMA ANALYSIS. Use the financial statements for Costco Wholesale, Inc. on the next page, to complete a pro- forma. Show all your work for full credit. Use the following assumptions: 5.5% increase in sales. The firm is operating at full capacity utilization. Investment income increases proportionally to sales. All assets increase proportionally to sales. Accounts payable, and accruals increase proportionally to sales. Dividend payout ratio is constant at 75%. Additional funds needed, if any, are financed with long-term debt at a rate of 6% interest. Use a tax rate of 35% for the projections. Answer the following questions based on the results of the pro-forma: 3. What is the projected amount of Additional Funds Needed? (45 points) Costco Wholesale, Inc. Consolidated Statement of Operations, 8/28/2016. In million $ First pass Second pass Sales Cost of goods sold Selling, General, and Admin Expenses Interest expense Investment Income $ 118,719 (102,979) (12,068) (133) 80 Income Taxes (35%) Net Income (1,267) $ 2,352 Assets: Cash & cash equivalents Short term investments Accounts receivable Other current assets Property and equipment Long term investments - securities Other assets Total $ 3,379 1,350 1,252 268 17,043 8,969 902 33,163 1,100 11,110 4,813 4,061 21,084 Liabilities: Current installments of debt Accounts payable Accrued current liabilities Long-term debt Total liabilities Shareholders' equity: Common stock Capital Surplus Treasury, at cost Retained Earnings Total shareholders' equity Total liabilities and equity 2 5,490 (1,099) 7,686 12,079 33,163 PART 2. PRO-FORMA ANALYSIS. Use the financial statements for Costco Wholesale, Inc. on the next page, to complete a pro- forma. Show all your work for full credit. Use the following assumptions: 5.5% increase in sales. The firm is operating at full capacity utilization. Investment income increases proportionally to sales. All assets increase proportionally to sales. Accounts payable, and accruals increase proportionally to sales. Dividend payout ratio is constant at 75%. Additional funds needed, if any, are financed with long-term debt at a rate of 6% interest. Use a tax rate of 35% for the projections. Answer the following questions based on the results of the pro-forma: 3. What is the projected amount of Additional Funds Needed? (45 points) Costco Wholesale, Inc. Consolidated Statement of Operations, 8/28/2016. In million $ First pass Second pass Sales Cost of goods sold Selling, General, and Admin Expenses Interest expense Investment Income $ 118,719 (102,979) (12,068) (133) 80 Income Taxes (35%) Net Income (1,267) $ 2,352 Assets: Cash & cash equivalents Short term investments Accounts receivable Other current assets Property and equipment Long term investments - securities Other assets Total $ 3,379 1,350 1,252 268 17,043 8,969 902 33,163 1,100 11,110 4,813 4,061 21,084 Liabilities: Current installments of debt Accounts payable Accrued current liabilities Long-term debt Total liabilities Shareholders' equity: Common stock Capital Surplus Treasury, at cost Retained Earnings Total shareholders' equity Total liabilities and equity 2 5,490 (1,099) 7,686 12,079 33,163
