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Please give me the correct answer and the EXCEL Formula. Thanks! Dream Inc.'s management team is working on next year's annual budget. Sales are projected
Please give me the correct answer and the EXCEL Formula. Thanks!
Dream Inc.'s management team is working on next year's annual budget. Sales are projected to increase 4% next year. All costs (except interest and taxes), current assets and accounts payable are expected to vary with sales. Interest expense and the tax rate will remain constant Management plans to maintain a constant dividend payout ratio next year. Assume no new debt or equity will be issued. The company is currently operating at a fixed asset capacity of 80%. 1) Complete Dream Inc.'s Pro Forma Income Statement and Pro Forma Balance Sheet below. Sales growth Tax rate 30% Dividend Payout Ratio 4% Pro Forma S S Balance Sheet Pro Forma AP NP Total CL Base 52,000 98,500 110,000 Base 46,000 71,000 Cash AR Inventory Total CA Income Statement Base Pro Forma Sales S 650.000 COGS 277,500 Other exps 123,000 EBIT Interest 17.500 Taxes Net Income LTD 182,500 Fixed assets 405,000 C. shares RE Total equity 255,000 111,000 Addn to RE Dividends 30,000 Total Assets Total L&E EFN 2) What is Dream Inc.'s full capacity sales (FCs)? (in other words, what is the maximum sales amount for the current amount of fixed assets)? FCS = 3) Based on your answer in part (2), does Dream Inc. need to buy additional fixed assets to achieve the sales gro! 4) Based on your answer in part (1), does Dream Inc. need to increase or decrease its EFN to achieve a sales growth of 4 5) State two possible ways Dream Inc. could resolve its external financing requirement (reduce EFN to zero). Instead of operating at a fixed asset capacity of 80%, suppose Dream Inc. was operating at full fixed asset capacity (100%). 6) What will total fixed assets need to be in order to achieve the 4% sales growth? Total fixed assets - New fixed assets = 7) How much in new fixed assets will need to be purchased and/or sold to achieve this new total amount of fixed assetsStep by Step Solution
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