Question
Problem 9-9 Additional Funds Needed Garlington Technologies Inc.'s 2012 financial statements are shown below: Balance Sheet as of December 31, 2012 Cash $ 180,000 Accounts
Problem 9-9 Additional Funds Needed
Garlington Technologies Inc.'s 2012 financial statements are shown below:
Balance Sheet as of December 31, 2012
Cash | $ 180,000 | Accounts payable | $ 360,000 | |
Receivables | 360,000 | Notes payable | 156,000 | |
Inventories | 720,000 | Accruals | 180,000 | |
Total current assets | $1,260,000 | Total current liabilities | $ 696,000 | |
Fixed assets | 1,440,000 | Common stock | 1,800,000 | |
Retained earnings | 204,000 | |||
Total assets | $2,700,000 | Total liabilities and equity | $2,700,000 |
Income Statement for December 31, 2012
Sales | $3,600,000 |
Operating costs | 3,279,720 |
EBIT | $ 320,280 |
Interest | 18,280 |
EBT | $ 302,000 |
Taxes (40%) | 120,800 |
Net income | 181,200 |
Dividends | $ 108,000 |
Suppose that in 2013 sales increase by 5% over 2012 sales and that 2013 dividends will increase to $156,000. Forecast the financial statements using the forecasted financial statement method. Assume the firm operated at full capacity in 2012. Use an interest rate of 8%, and assume that any new debt will be added at the end of the year (so forecast the interest expense based on the debt balance at the beginning of the year). Cash does not earn any interest income. Assume that the AFN will be in the form of notes payable. Round your answers to the nearest dollar. Do not round intermediate calculations.
Garlington Technologies Inc. Pro Forma Income Statement December 31, 2013 | |||
Sales | $ | ||
Operating costs | $ | ||
EBIT | $ | ||
Interest | $ | ||
EBT | $ | ||
Taxes (40%) | $ | ||
Net income | $ | ||
Dividends: | $ | ||
Addition to RE: | $ |
Garlington Technologies Inc. Pro Forma Balance Statement December 31, 2013 | |||
Cash | $ | ||
Receivables | $ | ||
Inventories | $ | ||
Total current assets | $ | ||
Fixed assets | $ | ||
Total assets | $ | ||
Accounts payable | $ | ||
Notes payable | $ | ||
Accruals | $ | ||
Total current liabilities | $ | ||
Common stock | $ | ||
Retained earnings | $ | ||
Total liabilities and equity | $ |
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