Pro Forma Income Statement

Prepare a pro forma income statement and balance sheet for Thibodaux Inc. for $2020.$

For the Pro Forma Income Statement $2020$:

SALES $=$ increase of $18\mathrm{.}25\%$ over $2019,2019$ Sales were $$6,765,328$

Gross Profit margin $60\%,$

There are No Preferred Stock,

OTHER EXP $$1,500,000,$

Depreciation $$500,000,$

Interest $600,000,$

Taxes $50\%,$

CS Dividend Payout Ratio $40\%$ of NI

$2020$ Pro Forma IS

Thibodaux Inc.

Sales $$8,000,000$

$-$ CGS $$3,200,000$

$=$ Gross Profit $$4,800,000$

$-$ Other Expenses $$1,500,000$

$=$ EBDIT $$3,300,000$

$-$ DEPR $$500,000$

$=$ EBIT $$2,800,000$

$-$ Interest $$600,000$

$=$ EBT $$2,200,000$

$-$ Tax $0\mathrm{.}5$ $$1,100,000$

$=$ Net Profit $$1,100,000$

FROM YOUR PRO FORMA INCOME STATEMENT ANSWER:

$1)$Profit after Taxes $$1,100,000$

$2)$Dividends $$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

$3)$Earnings Available to Common Stockholders $$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

$4)$ Contribution To Retained Earnings $$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

$2$b$.$ Pro Forma Balance Sheet

For the Pro Forma Balance Sheet $2020$:

Thibodaux is at full capacity so Net fixed Assets will have to increase at the same percentage as the sales increased $($use $\%$ of sales$).$ The NFA should be larger for $2020!$ Look at Income Statement above for the $\%$ increase.

Due to the economy, ACP increases to $66$ days and Inventory Turn$-$Over is reduced to $7\mathrm{.}0.$

Use the $\%$ of sales for all liabilities that are spontaneous $($will increase as sales increase, that is AP and Accruals$).$ Look at IS above for the $\%$ increase.

The desired cash balance is $$450,000.$

Remember certain liabilities will also increase automatically $($spontaneously$)$ but some will not. Does NP & LTD increase because there was an increase in Sales? No$.$ A firm has to make a loan or issue more bonds. The firm has no plans at this time $($maybe after Pro Forma Balance Sheet is prepared the firm will$).$

Use Income Statement from #$3$ for retained earnings and Prepare Retained Earnings Statement.

RETAINED EARNINGS STATEMENT $2020$

Beginning Balance

$+$NI

etc

SALES........$$6,765,328.................$$$8,000,000$:

$4$ decimals

BB INC. Balance Sheet $2019\%$ of Sales PRO FORMA $2020$

Cash $400,000$ NA $

A$/$R $1,112,109$ NA $\_\_\_\_\_\_\_\_\_$

Inv $902,044$ NA $\_\_\_\_\_\_\_\_\_$

Total Current Assets $2,414,153$ NA

Net Fixed Assets $10,000,000\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

Total Assets $12,414,153$

Accounts Payable $500,000\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

Notes Payable $1,000,000$ NA $\_\_\_\_\_\_\_\_\_\_\_$

Accruals $200,000\_\_\_\_\_\_\_\_\_\_\_$

Total Current Liabilities $1,700,000$ NA $\_\_\_\_\_\_\_\_\_\_\_$

Long$-$term Debt $4,714,153$ NA $\_\_\_\_\_\_\_\_\_\_\_$

Common Stock $($par $$1)1,000,000$ NA $1,000,000$

Retained Earnings $5,000,000\_\_\_\_\_\_\_\_\_\_\_$

Total Liabilities & Equity $12,414,153$

Complete the Pro Forma BS for $2020$ above to determine if financing is required.

$1.$ Total Assets $$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

$2.$ Total Liabilities & Equity $$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

$3.$ FINANCING REQUIRED or EFN........................ $$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$