Problem 4-5

The management of Coker Corp. is doing a quick forecast of 20X9 using the modified percentage of sales method in preparation for a more detailed planning exercise later in the month. The estimate is to assume a 10% growth in sales. All other line items are to be assumed to grow at the same rate except for fixed assets which is projected to increase by $87,000 due to an expansion program already underway. Approximate financial statements for the current year, 20X8, and a planning worksheet are shown below. The firm pays 10% interest on all of its debt. Assume the tax rate is a flat 25%. There are no plans for dividends or the sale of additional stock next year. Make a forecast of Coker's complete income statement and balance sheet. Enter your answers in thousands. For example, an answer of $12 thousands should be entered as 12, not 12,000. (Hints: The easiest way to grow a number by 10% is to multiply it by 1.1 rather than taking 10% and adding. Do not grow subtotals. For example, to grow revenue and COGS by 10%, round each to the nearest thousand and subtract for gross margin. Don't grow interest, debt, or equity; use the debt/interest iteration technique.) Round your answers to the nearest whole thousand. Enter all amounts as a positive numbers.

Coker Corp.
Current and Projected Income Statements ($000)
		20X8		20X9
Revenue		$600		$ fill in the blank 1
COGS		268		fill in the blank 2
Gross Margin		$332		$ fill in the blank 3
Expenses		217		fill in the blank 4
EBIT		115		fill in the blank 5
Interest (10%)		31		fill in the blank 6
EBT		$ 84		$ fill in the blank 7
Inc Tax (25%)		21		fill in the blank 8
Net Income		$ 63		$ fill in the blank 9

Coker Corp.
Current and Projected Balance Sheets ($000)
ASSETS						LIABILITIES & EQUITY
		20X8		20X9				20X8		20X9
C/A		$154		$ fill in the blank 10		C/L		$ 89		$ fill in the blank 11
F/A		523		fill in the blank 12		Debt		279		fill in the blank 13
Total		$677		$ fill in the blank 14		Equity		309		fill in the blank 15
						Total		$677		$ fill in the blank 16