PROBLEMS Comparative income statements and balance sheets for Coca-Cola are shown below (5 millions). Year 2 Coca-Cola PROBLEM 9-1 Preparing Pro Forma Fra Statement Year 1 Income Statement Net sales. Cost of goods Gross profit Selling, general, and administrative expense Depreciation and amortization expense. Interest expense (revenue).. Income before tax Income tax expense Net income Outstanding shares $20,092 $19,889 6,044 6,204 14,048 13,685 7,893 9.221 803 773 (308) 292 5,660 3,399 1,691 1.222 $ 3,969 $ 2.177 3,491 3,481 (continued) Year 2 Year 1 Balance Sheet Cash Receivables. Inventories Other current assets Total current assets Property, plant, and equipment. Accumulated depreciation Net property, plant, and equipment. Other noncurrent assets Total assets. Accounts payable and accrued liabilities Short-term debt and current maturities of long-term debt. Income tax liabilities... Total current liabilities $ 1,934 1,882 1,055 2,300 7,171 7,105 2,652 4,453 10,793 $22,417 $ 1,892 1,757 1,066 1,905 6,620 6,614 2.446 4.168 10,046 $20,834 $ 3,679 3,899 851 8,429 $ 3,905 4,816 600 1,403 1,219 2,622 9,321 1.362 835 2,197 Deferred income taxes and other liabilities Long-term debt. Total noncurrent liabilities Common stock Capital surplus Retained earnings. Treasury stock. Shareholders' equity Total liabilities and equity 873 3,520 20,655 13,682 11,366 $22,417 870 3,196 18,543 13,293 9,316 $20,834 Required a. Use the following ratios to prepare a projected income statement, balance sheet, and statement of cash flows for Year 3. Sales growth 1.02% Gross profit margin 69.92% Selling general, and administrative spense/Sales 39.28% Depreciation expense/Prior-year PPE gross 12.14% Interest expense/Prior-year long-term debt 5.45% Income tax expense Pretax income 29.88% Accounts receivable turnover 10.68 Inventory turnover 5.73 Accounts payable turnover 1.54 Taxes payable/Tax capense 50.33% Total assets/Stockholders' equity financial leverage) 2.06 Dividends per share $ 137 Capital expenditures/Sales 591% b. Based on your initial projections, how much external financing long-term debt and/or stockholders' equity) will Coca-Cola need to fund its growth at projected increases in sales! PROBLEMS Comparative income statements and balance sheets for Coca-Cola are shown below (5 millions). Year 2 Coca-Cola PROBLEM 9-1 Preparing Pro Forma Fra Statement Year 1 Income Statement Net sales. Cost of goods Gross profit Selling, general, and administrative expense Depreciation and amortization expense. Interest expense (revenue).. Income before tax Income tax expense Net income Outstanding shares $20,092 $19,889 6,044 6,204 14,048 13,685 7,893 9.221 803 773 (308) 292 5,660 3,399 1,691 1.222 $ 3,969 $ 2.177 3,491 3,481 (continued) Year 2 Year 1 Balance Sheet Cash Receivables. Inventories Other current assets Total current assets Property, plant, and equipment. Accumulated depreciation Net property, plant, and equipment. Other noncurrent assets Total assets. Accounts payable and accrued liabilities Short-term debt and current maturities of long-term debt. Income tax liabilities... Total current liabilities $ 1,934 1,882 1,055 2,300 7,171 7,105 2,652 4,453 10,793 $22,417 $ 1,892 1,757 1,066 1,905 6,620 6,614 2.446 4.168 10,046 $20,834 $ 3,679 3,899 851 8,429 $ 3,905 4,816 600 1,403 1,219 2,622 9,321 1.362 835 2,197 Deferred income taxes and other liabilities Long-term debt. Total noncurrent liabilities Common stock Capital surplus Retained earnings. Treasury stock. Shareholders' equity Total liabilities and equity 873 3,520 20,655 13,682 11,366 $22,417 870 3,196 18,543 13,293 9,316 $20,834 Required a. Use the following ratios to prepare a projected income statement, balance sheet, and statement of cash flows for Year 3. Sales growth 1.02% Gross profit margin 69.92% Selling general, and administrative spense/Sales 39.28% Depreciation expense/Prior-year PPE gross 12.14% Interest expense/Prior-year long-term debt 5.45% Income tax expense Pretax income 29.88% Accounts receivable turnover 10.68 Inventory turnover 5.73 Accounts payable turnover 1.54 Taxes payable/Tax capense 50.33% Total assets/Stockholders' equity financial leverage) 2.06 Dividends per share $ 137 Capital expenditures/Sales 591% b. Based on your initial projections, how much external financing long-term debt and/or stockholders' equity) will Coca-Cola need to fund its growth at projected increases in sales