Question
Pro forma balance sheet Peabody & Peabody has 20192019 sales of $ 10.8$10.8 million. It wishes to analyze expected performance and financing needs for 20212021long
Pro forma balance sheet Peabody & Peabody has
20192019
sales of
$ 10.8$10.8
million. It wishes to analyze expected performance and financing needs for
20212021long dash2
years ahead. Given the following information, respond to parts a. and b.
(1) The percents of sales for items that vary directly with sales are as follows: Accounts receivable;
11.9 %11.9% ,
Inventory;
18.4 %18.4% ;
Accounts payable,
13.7 %13.7% ;
Net profit margin,
3.4 %3.4%.
(2) Marketable securities and other current liabilities are expected to remain unchanged.
(3) A minimum cash balance of
$ 482 comma 000$482,000
is desired.
(4) A new machine costing
$ 650 comma 000$650,000
will be acquired in
20202020 ,
and equipment costing
$ 854 comma 000$854,000
will be purchased in
20212021.
Total depreciation in
20202020
is forecast as
$ 286 comma 000$286,000 ,
and in
20212021
$ 387 comma 000$387,000
of depreciation will be taken.
(5) Accruals are expected to rise to
$ 503 comma 000$503,000
by the end of
20212021.
(6) No sale or retirement of long-term debt is expected.
(7) No sale or repurchase of common stock is expected.
(8) The dividend payout of
50 %50%
of net profits is expected to continue.
(9) Sales are expected to be
$ 12.0$12.0
million in
20202020
and
$ 11.7$11.7
million in
20212021.
(10) The December 31,
20192019 ,
balance sheet is here
LOADING...
.
a. Prepare a pro forma balance sheet dated December 31,
20212021.
b. Discuss the financing changes suggested by the statement prepared in part
(a ).
Leonard Industries Balance Sheet December 31, 20192019
Assets
Liabilities and Stockholders' Equity
Cash
$ 405 comma 000$405,000
Accounts payable
$ 1 comma 398 comma 000$1,398,000
Marketable securities
195 comma 000195,000
Accruals
395 comma 000395,000
Accounts receivable
1 comma 197 comma 0001,197,000
Other current liabilities
80 comma 30080,300
Inventories
1 comma 799 comma 0001,799,000
Total current liabilities
$ 1 comma 873 comma 300$1,873,300
Total current assets
$ 3 comma 596 comma 000$3,596,000
Long-term debt
1 comma 998 comma 7001,998,700
Net fixed assets
3 comma 996 comma 0003,996,000
Common stock
3 comma 720 comma 0003,720,000
Total assets
Modifying $ 7 comma 592 comma 000 with double underline $7,592,000
Total liabilities and
stockholders' equity
Modifying $ 7 comma 592 comma 000 with double underline $7,592,000
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