Prob 17-7 Pro Forma income statement. At the end of last year, Roberts Inc reported the following income statement(in millions of dollars). Sales $3,000 Operations costs excluding depreciation $2,450 EBITDA $ 550 Depreciation $250 EBIT $300 Interest $125 EBT $175 Taxes (40%) $ 70 Net Income $105 Looking ahead to the following year, the companys CFO has assembled the following information: (a) Year -end sales are expected to be 10 percent higher than the $30 billion in sales generated last year. (b) Year end operating costs, excluding depreciation, are expected to equal 80 percent of year- end sales. (c) Depreciation is expected to increase at the same rate as sales. (d) Interest costs are expected to remain unchanged. (e) The tax rate is expected to remain at 40 percent. On the basis of this information, what will be the forecast for Roberts year end net income?

LONG-TERM FINANCING NEEDED At year-end 2015, total assets for Ambrose Inc. were $1 2 million and accounts payable were $375,000. Sales, which in 2015 were $2 5 million, are expected to increase by 25% in 2016. Total assets and accounts payable are proportional to sales, and that relationship will be maintained; that is, they will grow at the same rate as sales. Ambrose typically uses no current liabilities other than accounts payable. Common stock amounted to $425,000 in 2015, and retained earnings were $295,000. Ambrose plans to sell new common stock in the amount of $75,000. The firms profit margin on sales is 6%; 60% of earnings will be retained. a. What were Ambroses total liabilities in 2015? b. How much new long-term debt financing will be needed in 2016? (Hint: AFN New stock New long term debt.)