problem 5

2017 5. Universal Products Co. has almost finished its pro forma financial statements for 2018, as shown next. Universal Products Co. Financial Statements, 2017 and Pro Forma 2018 ($ thousands) INCOME STATEMENT BALANCE SHEET Actual Forecast Actual Forecast 2017 2018 2018 Sales $5,000 $5,500 Current assets $2,500 $2,750 Cost of goods sold 4,000 4,400 Net fixed assets 2,000 Operating expense 500 Total assets $4,500 Depreciation expense 260 Interest expense 50 Current liabilities $1,050 $1,155 Earnings before tax Long-term debt 500 Tax 84 Owners' equity 2.950 Net income $130 $156 Total liabilities & equity $4,500 a. Assume that Universal plans to purchase $500,000 in fixed assets during 2018 and to dispose of no fixed assets during 2018. What would be its forecast for net fixed assets in 2018? 550 250 50 200 240 500 70 b. Assume that Universal plans to have a dividend payout ratio of 50 percent in 2018 and will neither sell nor repurchase equity during 2018. What would be its forecast for owners' equity in 2018? c. Given the assumptions in questions (a) and (b), what is Universal's projected external funding required for 2018