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Please answer parts A - G and also show formulas used to find solutions Chapter 3 Problem 13 13. Below are the 2014 financial statements
Please answer parts A - G and also show formulas used to find solutions
Chapter 3 Problem 13 13. Below are the 2014 financial statements for Aquatic Supplies Co. Also appearing are management's forecasts for how individual financial statement items wi vary in the future. The company expects sales to grow 12% next year. Aquatic Supplies finances all of its needs with 10-year long-term debt at 10% interest, while excess cash at the end of the year is added to the cash balance. a. Prepare a spreadsheet to estimate Aquatic Supplies 's 2015 need for extemal funding assuming long-term debt and interest expense remain at their 2011 levels b. Modify your spreadsheet forecast in part (a) to capture the interdependence between the loan and interest expense. That is, switch your spreadsheet to "manual calculation" and include the necessary loan and added interest expense in your forecast. c. Is the required loan in part (b) equal to the required loan you calculated in part (a)? Why are they different? d Perform a sensitivity analysis of Aquatic Supplies Co s extema financing needs as determined in part Assume sales grow at 17% instead of 12%. How much does the e Perform a scenario analysis on the com pany's projection as determined in part b Assume sales grow 20%, the cost of goods sold is 38% of sales inventory alls om 5% f. Retum now to the original assumptions and extend your projections in part (b) through 2019. Continue to assume that all external funding needs will be met with debt at 10% g. Perform a scenano analysis on your 5-year projection in part f Assume growth in sales is 10%, the cost of goods sold is 41% of sales, and selling, general and bank loan increase as sales go from 12% to 17%? of sales to 39 and accounts receivable fall from 13% of sales to 10%. What happens to the loan need in this scenario relative to your answer in part b)? interest and any excess cash will add to the company's cash balance. What are your projected values for long-term debt and cash and equivalents in 2019? administrative expenses are 50% of sales. What are your projected values for long-term debt and cash balance in 2019
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