Problem 23-07 RRM, Inc. has the following balance sheet: RRM, Incorporated Balance Sheet as of 12/31/XO Assets Liabilities and Equity Cash $ 2,800 Accruals $ 4,100 Marketable securities 2.500 Accounts payable 16.650 Accounts receivable 17.580 Notes payable 8,000 Inventory 19,410 Long-term debt 25.000 Common stock 21,000 plant and equipment 42.000 Retained earnings 0,340 $3,290 $84.290 Sales are currently $100,000, but management expects sales to rise to $130,000. The net profit margin is expected to be percers and the film distributes 70 percent of Its earnings as dividends. Management is concerned about the firm's need for external funding to cover the expansion in assets required by the expansion in sales. To achieve sales of $130,000, management will have to expand plant by $20,000 and expects to increase its holdings of cash by $2,000. However the holding of marketable securities may be reduced to zero a. According to the percent of sales and the additional information, will the firm need external financing, and, if so how much? Round your answer to the nearest dollar. Enter the answer as a positive value The firm sect funds of $ Ch 23: End-of-Chapter Problems - Forecasting 21.000 Plant and equipment Common stock Retained earnings 42.000 9.340 $84.290 $34.290 Sales are currently $100,000, but management expects sales to rise to $130,000. The net profit margin is expected to be 8 percent, and the firm distributes 70 percent of its earnings as dividends. Management is concerned about the firm's need for external funding to cover the expansion in assets required by the expansion in sales. To achieve sales of $130,000, management will have to expand plant by $20,000 and expects to increase its holdings of cash by $2,000. However, the holding of marketable securities may be reduced to zero a. According to the percent of sales and the additional Information, will the firm need external financing, and, if so, how much? Round your answer to the nearest dollar. Enter the answer as a positive value The firm Select funds of $ b. Construct a pro forma balance sheet indicating the forecasted new entries for sales of $130,000. If the firm has excess funds, they should be invested in marketable securities. If the firm needs funds, these should be covered by issuing new long-term debt. If your answer is zero, enter "o". Round your answers to the nearest dollar. RRM, Incorporated Pro Forma Balance Sheet as of 12/31/XI Assets Liabilities and Equity Accruals Marketable securities Accounts payable Accounts receivable Notes payable Inventory 23: End-of-Chapter Problems - Forecasting ero. a. According to the percent of sales and the additional information, will the firm need external financing, and, if so, how much? Round your answer to the nearest dollar. Enter the answer as a positive value The firm -Select b. Construc-Select- funds of $ ce sheet indicating the forecasted new entries for sales of $130,000. If the firm has excess funds, they should be invested in firm needs funds, these should be covered by issuing new long-term debt. If your answer is zero, enter "o". Round your answers to marketat will need external the near cash RRM, Incorporated Pro Forma Balance sheet as of 12/31/X1 Assets Liabilities and Equity Accruals Marketable securities Accounts payable Accounts receivable Notes payable Inventory Long-term debt Common stock Plant and equipment Retained earnings
