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Pro-forma financial statements Spring 17 Create pro forma financial statements from the information provided below Income Statement Year 1 Year 1 Year 0 Year 1
Pro-forma financial statements | Spring 17 | ||||||||||||
Create pro forma financial statements from the information provided below | |||||||||||||
Income Statement | Year 1 | Year 1 | |||||||||||
Year 0 | Year 1 | Year 2 | com. size | Sales revenues increase 3.2% | |||||||||
Revenues | 17,000 | 100.00% | Gross margin is 42% | ||||||||||
Cost of goods sold | 9,200 | SG&A decreases 1.2% | |||||||||||
Gross profit | 7,800 | $2200 of PP&E is purchased on January 1, | |||||||||||
SG&A | 4,790 | New PP&E is depreciated over 10 years | |||||||||||
Depreciation | 1,700 | Inventory grows in line with COGS | |||||||||||
Operating Profit | 1,310 | Assume that all other asset accounts grow in line with sales (3.2%). | |||||||||||
Interest expense | 155 | Accounts Payable grow in line with COGS | |||||||||||
Income before taxes | 1,155 | Current maturity of long-term debt declines to $100 | |||||||||||
Taxes @35% | 404 | Unless otherwise stated, liability accounts grow in line with sales (3.2%) | |||||||||||
Net Income | 751 | Treasury Stock purchases equal $300 | |||||||||||
Average interest cost of all interest bearing debt is 1.7% | |||||||||||||
Dividends | 225 | Dividend payout ratio is 26% | |||||||||||
Tax rate is 35% | |||||||||||||
Addition to retained earnings | 526 | Funding requirements should be financed with short-term debt | |||||||||||
Balance Sheet | Y2 | ||||||||||||
Sales revenue decline by 1.8% | |||||||||||||
Assets | Year 1 | Gross margin increases to 43% | |||||||||||
Year 0 | Year 1 | Year 2 | com. size | Inventory grows in line with COGS | |||||||||
Cash and cash equivalents | 640 | SG&A declines by 1% | |||||||||||
Marketable securities | 28 | $800of PP&E is sold on January 1 for $600 cash. (Gross =$800, Accumulated depreciation = $200) | |||||||||||
Accounts Receivables | 8,200 | Annual depreciation expense declines by $ 90 | |||||||||||
Inventory | 3,142 | Assume that all other asset accounts grow in line with sales. (-1.8%) | |||||||||||
Prepaid expen. & other assets | 1,323 | Accounts Payable grow in line with COGS | |||||||||||
Total Current Assets | 13,333 | Current maturity of long-term debt remains at $100. | |||||||||||
Unless otherwise stated, liability accounts grow in line with sales (-1.8%) | |||||||||||||
Plant property and equipment (gross) | 7,607 | Treasury Stock purchase is $100. | |||||||||||
Accumulated Depreciation | 3,000 | Average interest cost of all interest bearing debt is 2.0% | |||||||||||
PP&E (net) | 4,607 | Dividend payout ratio changes to 26% | |||||||||||
Tax rate is 35% | |||||||||||||
Total Assets | 17,940 | 100.00% | Funding requirements should be financed with short-term debt | ||||||||||
Excess cash is used to retire short-term debt | |||||||||||||
Liabilities & Shareholders' Equity | Year 1 | 50 shares of $1 par value common stock is issued for $200. | |||||||||||
Year 0 | Year 1 | Year 2 | com. size | Do not add significant amounts to cash unless Loans & notes payable is drawn down to zero. | |||||||||
Accounts payable | 3,148 | ||||||||||||
Loans & notes payable (plug) | 2,423 | ||||||||||||
Current maturity of long-term debt | 500 | ||||||||||||
Accrued income taxes | 1,322 | ||||||||||||
Total Current Liabilities | 7,393 | ||||||||||||
Long-term debt | 2,300 | ||||||||||||
Defered income taxes | 195 | ||||||||||||
Shareholders' Equity | |||||||||||||
Common Stock at par | 860 | ||||||||||||
Capital Surplus | 863 | ||||||||||||
Retained earnings | 6,429 | ||||||||||||
Less treasury stock | (100) | ||||||||||||
Total equity | 8,052 | ||||||||||||
Total liabilities & shareholder equity | 17,940 | 100.00% |
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