Prepare a projected Income statement for $2018$

Prepare a projected year$-$end Balance Sheet for $2018$

Prepare a projected Cash flow statement for $2018$

Assumptions for $2018$ based on the company's expansion plans:

Cost of goods sold $=43\mathrm{.}33\%$ of sales

Operating expense $=15\%$ of sales

Depreciation $=$ No change, assuming the addition $($Purchases$)$ occur at the end of $2018.$

Repayment of principal $($Long$-$term debt$)=$$$20$

Cost of borrowing is $10\%,$ stays the same FOR $2018$

Income tax $=$ Tax exp.$/$Pre$-$tax income $=35\%$

Dividend payout of $20\%$ of EAT $($Net Income$),$

B$/$S accounts:

$[$ Accounts receivable $,=23\mathrm{.}3\%of$ sales $],[$ Inventories $,=28\mathrm{.}3\%of$ sales $],[$ Net plant $(PP$&$E),=30\mathrm{.}00\%of$ sales $],[$ Accounts payable $,=41\mathrm{.}67\%of$ sales $]$

Reduce Long$-$term debt by $$20$ in the $\frac{B}{S}$

Long$-$term debt$-$$$20$ will be repaid in $2018.,$ Assuming the repayment of $$20$ will not take place until December $2018,$

External Financing need $($Excess cash needs$)$: Common stock:

Retained earnings $=$ Beg. Retained earnings $(2017)$ plus addition to reatined earning $($Income statement$)$

Link the 'cash & cash equivalents, end of the year' from the cash flow statement to 'Cash' in the Balance sheet

Assume an equity capital Raise of $$80$ issuing common stock: Add to the beginning $(2017)$common stock

common stock $100\mathrm{.}00180$

Retained earnings $70\mathrm{.}00158\mathrm{.}6678$

Total liabilities and equity $365\mathrm{.}00576\mathrm{.}1828$

$00$

$20172018$E

Sales $300\mathrm{.}00450\mathrm{.}00$

COGS $130\mathrm{.}00194\mathrm{.}99$

Gross profit $170\mathrm{.}00255\mathrm{.}02$

Less: Selling, General and admin$($COGS$)50\mathrm{.}0067\mathrm{.}50$

Less: Depreciation $10\mathrm{.}0010\mathrm{.}00$

Operating expenses $60\mathrm{.}0077\mathrm{.}50$

EBIT $110\mathrm{.}00177\mathrm{.}52$

Less: Interest expense $7\mathrm{.}007\mathrm{.}00$

Pretax income $($EBT$)103\mathrm{.}00170\mathrm{.}52$

Less: Income tax exp $36\mathrm{.}0559\mathrm{.}68$

Net income $($Earnings after tax$)66\mathrm{.}95110\mathrm{.}83$

Dividends $13\mathrm{.}3922\mathrm{.}17$

Addition to Retained Earnings $53\mathrm{.}5688\mathrm{.}67$

$2018$E

CASH FLOW FROM OPERATIONS

Net income $110\mathrm{.}83475$

Depreciation $10$

Changes in operating assets and liability:

Change in AR $-34\mathrm{.}85$

Change in Inventory $-42\mathrm{.}35$

Change in Account Payables $62\mathrm{.}515$

CASH FLOW FROM OPERATIONS $106\mathrm{.}14975$

Payment for purchase of PP&E $-35$

CASH FLOW FROM INVESTMENTS $-35$

Additional Common stock issued $80$

Repayment of long$-$term debt $-20$

Dividends paid $-22\mathrm{.}16695$

CASH FLOW FROM FINANCING $37\mathrm{.}83305$

NET INCREASE $($DECREASE$)$ IN CASH $108\mathrm{.}9828$

Cash and equivalents, beginning of year $100\mathrm{.}00$

Cash and equivalents, end of year $208\mathrm{.}9828$

End PP&E $135$

Big. PP&E $110$

Depr. $$10\mathrm{.}00$

Purchases $35$

Cash flow statement:

Cash flow from operation

Add net income

Add depreciation back to 'Cash flow from operation': it is a non$-$cash item

Change in AR $($take the difference between $2017$ and $2018,$ increase in asset $($use of cash in $2018),$ negative number

Change in Inventory$($take the difference between $2017$ and $2018,$ increase in asset $($use of cash in $2018),$ negative number

Change in Account Payables$($take the difference between $2017$ and $2018,$ increase in liabilities $($source of cash in $2018),$ positive number

Additional purchases : use of cash $($negative number$),$ Cash flow from investing

$($USE THE EQUATION TO CACULATE THE PURCHASE $($ADDITIONAL PP&E$)$

add additional 'Common stock issued' $($source of cash, positive number$),$ Cash flow from financing

Reduce $($use of cash$)$ the 'dividends paid' from Cash flow from financing

Reduce $($use of cash$)$ the partial debt repayment amount from Cash flow from Financing