Please help me answer and explain questions A, B and C. There is charts for number reference for the questions!

Percent of Sales Technique Homework XYZ Company Income Statement For the Year Ended 12/31/xxxx 28 Sales $140,000 Cost of Goods Sold 2117.000 Gross Profit 23,000 Operating Expenses 000 12,830 EBIT 10,170 Interest Expense 4,610 EBT 5,560 Taxes @ 39% 2,168 DO Net Income 3,392 Dividend 1,018 00203 Addition to Retained Earnings $2,374 XYZ Company Balance Sheet 12/31/xx Assets Current Assets Cash Accounts Receivable Inventory Prepaid Items Other CA Total Current Assets Net Plant & Equipment Total Assets 57,500 12,100 10,400 5.900 24.300 $40,200 82.300 $122,500 XYZ Company Balance Sheet 12/31/xxx Liabilities & Equity Current Liabilities Accounts Payable Wages Payable Notes Payable Taxes Payable Total Cument Liabilities Long Term Debt Total Liabilities $7,200 3,600 5,400 1.200 $20,400 35,700 $56,100 Common Stock Retained Earnings 28,700 37,700 Total Liabilities & Equity $122,500 Homework Problem, cont'd The projected sales for the foreciat period is $165,000. Assume that the payout ratio will be maintained in the forecast period. The firm estimates that additional net fixed investment of $18,000 will be required during the forecast period. Assume that all current assets are spontaneous except Other Current Assets which is assumed not to change Assume that all current liabilities except Notes Payable are spontaneous A Prepare the pro forma Balance Sheet and pro forma Income Statement. The EFR will be a plug number that makes the balance sheet balance like in the class example B. Using the existing financial statements as your basis, estimate firm XYZ s EFR for the forecast period ugain, but this time using the cookbook model. Assume that the profit margin remains the sume in the forecast period. Also based on the cookbook equation, how much funding is expected to come from each of the internal sources of funds (change in SL and retained earnings). If firm XYZ must maintain a minimum current ratio of 1.8 and a maximum debt ratio of So, how would you propose the EFR be financed (how much short term debt, long term debt, and equity? C. Based on your results in part prepare a Pro Forma Sources and Uses of Funds Statement to reflect the financing allocations that you decided on in part B. The only format change required is to break the total EFR down into the amounts of short term debt, long term debt, and new equity. You will have to use the numbers for ACA, ASI, addition to R.E., and EFR that you calculated in part B to make it balance, since they may be slightly different than those from part A. Explain the basis for your financing allocations. Homework Problem, cont'd Hints Pro Forma TA = Existing TA + ACA+ANFA Max Pro Forma Total Liabilities = (D.R. ConstraintPro Forma TA) Max Additional Ti. - Max. Pro Forma TL-Existing TL. Max Additional External Debt - Max Additional TL - ASL Min Additional External Equity = EFR - Max Additional External Debt Pro Forma CA = Existing CA+ACA Max Pro Forma CL - Pro Forma CA/CR Constraint Max Additional CL = Max Pro Forma CL - Existing CL Max Additional Notes Puyable (N/P) = Max Additional CL-ASL. Additional LTD Max Additional External Debt - Max N/P Homework Problem, cont'd The projected sales for the forecast period is $165,000. Assume that the payout ratio will be maintained in the forecast period. The firm estimates that additional net fixed asset investment of $18,000 will be required during the forecast period. Assume that all current assets are spontaneous except Other Current Assets which is assumed not to change. Assume that all current liabilities except Notes Payable are spontaneous. A. Prepare the pro forma Balance Sheet and pro forma Income Statement. The EFR will be a plug number that makes the balance sheet balance like in the class example. B. Using the existing financial statements as your basis, estimate firm XYZ's EFR for the forecast period again, but this time using the cookbook model. Assume that the profit margin remains the same in the forecast period. Also based on the cookbook equation, how much funding is expected to come from each of the internal sources of funds (change in SL and retained earnings). If firm XYZ must maintain a minimum current ratio of 1.8 and a maximum debt ratio of 0.50, how would you propose the EFR be financed (how much short term debt, long term debt, and equity)? C. Based on your results in part B, prepare a Pro Forma Sources and Uses of Funds Statement to reflect the financing allocations that you decided on in part B. The only format change required is to break the total EFR down into the amounts of short term debt, long term debt, and new equity. You will have to use the numbers for ACA, ASL, addition to R.E., and EFR that you calculated in part B to make it balance, since they may be slightly different than those from part A. Explain the basis for your financing allocations. Percent of Sales Technique Homework XYZ Company Income Statement For the Year Ended 12/31/xxxx 28 Sales $140,000 Cost of Goods Sold 2117.000 Gross Profit 23,000 Operating Expenses 000 12,830 EBIT 10,170 Interest Expense 4,610 EBT 5,560 Taxes @ 39% 2,168 DO Net Income 3,392 Dividend 1,018 00203 Addition to Retained Earnings $2,374 XYZ Company Balance Sheet 12/31/xx Assets Current Assets Cash Accounts Receivable Inventory Prepaid Items Other CA Total Current Assets Net Plant & Equipment Total Assets 57,500 12,100 10,400 5.900 24.300 $40,200 82.300 $122,500 XYZ Company Balance Sheet 12/31/xxx Liabilities & Equity Current Liabilities Accounts Payable Wages Payable Notes Payable Taxes Payable Total Cument Liabilities Long Term Debt Total Liabilities $7,200 3,600 5,400 1.200 $20,400 35,700 $56,100 Common Stock Retained Earnings 28,700 37,700 Total Liabilities & Equity $122,500 Homework Problem, cont'd The projected sales for the foreciat period is $165,000. Assume that the payout ratio will be maintained in the forecast period. The firm estimates that additional net fixed investment of $18,000 will be required during the forecast period. Assume that all current assets are spontaneous except Other Current Assets which is assumed not to change Assume that all current liabilities except Notes Payable are spontaneous A Prepare the pro forma Balance Sheet and pro forma Income Statement. The EFR will be a plug number that makes the balance sheet balance like in the class example B. Using the existing financial statements as your basis, estimate firm XYZ s EFR for the forecast period ugain, but this time using the cookbook model. Assume that the profit margin remains the sume in the forecast period. Also based on the cookbook equation, how much funding is expected to come from each of the internal sources of funds (change in SL and retained earnings). If firm XYZ must maintain a minimum current ratio of 1.8 and a maximum debt ratio of So, how would you propose the EFR be financed (how much short term debt, long term debt, and equity? C. Based on your results in part prepare a Pro Forma Sources and Uses of Funds Statement to reflect the financing allocations that you decided on in part B. The only format change required is to break the total EFR down into the amounts of short term debt, long term debt, and new equity. You will have to use the numbers for ACA, ASI, addition to R.E., and EFR that you calculated in part B to make it balance, since they may be slightly different than those from part A. Explain the basis for your financing allocations. Homework Problem, cont'd Hints Pro Forma TA = Existing TA + ACA+ANFA Max Pro Forma Total Liabilities = (D.R. ConstraintPro Forma TA) Max Additional Ti. - Max. Pro Forma TL-Existing TL. Max Additional External Debt - Max Additional TL - ASL Min Additional External Equity = EFR - Max Additional External Debt Pro Forma CA = Existing CA+ACA Max Pro Forma CL - Pro Forma CA/CR Constraint Max Additional CL = Max Pro Forma CL - Existing CL Max Additional Notes Puyable (N/P) = Max Additional CL-ASL. Additional LTD Max Additional External Debt - Max N/P Homework Problem, cont'd The projected sales for the forecast period is $165,000. Assume that the payout ratio will be maintained in the forecast period. The firm estimates that additional net fixed asset investment of $18,000 will be required during the forecast period. Assume that all current assets are spontaneous except Other Current Assets which is assumed not to change. Assume that all current liabilities except Notes Payable are spontaneous. A. Prepare the pro forma Balance Sheet and pro forma Income Statement. The EFR will be a plug number that makes the balance sheet balance like in the class example. B. Using the existing financial statements as your basis, estimate firm XYZ's EFR for the forecast period again, but this time using the cookbook model. Assume that the profit margin remains the same in the forecast period. Also based on the cookbook equation, how much funding is expected to come from each of the internal sources of funds (change in SL and retained earnings). If firm XYZ must maintain a minimum current ratio of 1.8 and a maximum debt ratio of 0.50, how would you propose the EFR be financed (how much short term debt, long term debt, and equity)? C. Based on your results in part B, prepare a Pro Forma Sources and Uses of Funds Statement to reflect the financing allocations that you decided on in part B. The only format change required is to break the total EFR down into the amounts of short term debt, long term debt, and new equity. You will have to use the numbers for ACA, ASL, addition to R.E., and EFR that you calculated in part B to make it balance, since they may be slightly different than those from part A. Explain the basis for your financing allocations