Pro-forma financial statements Spring 21 ANTIA Income Statement Year 1 17,544 8,860 8,684 4,670 2,000 Year 2 17,281 8,640 8.640 4,600 Year o 17,000 9,200 7,800 4,790 1,700 1,310 155 1,155 404 751 Revenues Cost of goods sold Gross profit SG&A Depreciation Operating Profit Interest expense Income before taxes Taxes @35% Net Income Create pro forma financial statements from the information provided below Year 1 Year 1 com. size Sales revenues increase 3.2% 100.00% Gross margin is 49.5% 50.50% SG&A decreases by 2.5% $3000 of PP&E is purchased on January 1, New PP&E is depreciated over 10 years Inventory grows at the same rate as the growth in COGS Assume that all other asset accounts grow at the same rate as sales. Accounts Payable grow at the same rate as COGS Accrued and deferred income taxes grows at the same rate as tax expense. Long-term debt increases by $1500 Unless otherwise stated, liability accounts grow at the same rate as sales Treasury Stock purchases equal $300 Average interest cost of all interest bearing debt is 2.5% Dividend payout ratio is 30% Tax rate is 35% Funding requirements should be financed with short-term debt 0 0 Dividends 188 Addition to retained earnings 563 Balance Sheet Balance Sheet Assets Year 1 com. size Year 1 Year 2 Cash and cash equivalents Marketable securities Accounts Receivables Inventory Prepaid expen. & other assets Total Current Assets Year o 640 28 8,200 3,142 1.323 13,333 Plant property and equipment (gross) Accumulated Depreciation PP&E (net) 7,607 3,000 4,607 Y2 Sales revenue decline by 1.5% Gross margin increases to 50% Inventory grows in line with COGS SG&A increases by 1.5% $800 of PP&E(net) is sold on January 1 for $800 cash. (Gross =$1000, Accumulated depreciation = $200) Annual depreciation expense declines by $ 60 Assume that all other asset accounts change at the same rate as sales. Accounts Payable grow change at the same rate as COGS Long-term debt declines by $150 Accrued and deferred income taxes change at the same rate as tax expense. Unless otherwise stated, liability accounts change at the same rate as sales. Treasury Stock purchase is $200. Average interest cost of all interest bearing debt is 2.1% Dividend payout ratio changes to 22% Tax rate is 35% 200 shares of $1 par value common stock is issued for $800. Excess cash is used to retire short-term debt Do not add significant amounts to cash unless Loans & notes payable is drawn down to zero. Total Assets 17,940 Liabilities & Shareholders' Equity Year 1 Year 1 Year 2 com. size Accounts payable Loans & notes payable (plug) Accrued income taxes Total Current Liabilities Year 0 3,148 2,423 1,322 6,893 Long-term debt Defered income taxes 2,800 195 Shareholders' Equity Common Stock at par Capital Surplus Retained earnings Less treasury stock Total equity 860 863 6,429 -100 8,052 Total liabilities & shareholder equity 17,940 Year 1 Year 2 Statement of Retained Earnings Beginning retained earnings +Net Income -dividends Ending retained earnings Statement of Cash Flows Year 1 Year 2 Net Income + Depreciation + (increase) decrease in A.R. + (increase) decrease in inventory + (increase) decrease in prepaid exp. + increase (decrease) in A.P. + increase (decrease) in accrued taxes + increase (decrease) in deferred taxes + =Cash Flow from operations + (increase) decrease in marketable sec. + (increase) decrease in PPE =Cash Flow from investing + increase (decrease) in loans and notes. + increase (decrease) in LTD + increase (decrease) in common stock - dividends - treasury stock =Cash flow from financing Beginning cash +Change in cash Ending cash Pro-forma financial statements Spring 21 ANTIA Income Statement Year 1 17,544 8,860 8,684 4,670 2,000 Year 2 17,281 8,640 8.640 4,600 Year o 17,000 9,200 7,800 4,790 1,700 1,310 155 1,155 404 751 Revenues Cost of goods sold Gross profit SG&A Depreciation Operating Profit Interest expense Income before taxes Taxes @35% Net Income Create pro forma financial statements from the information provided below Year 1 Year 1 com. size Sales revenues increase 3.2% 100.00% Gross margin is 49.5% 50.50% SG&A decreases by 2.5% $3000 of PP&E is purchased on January 1, New PP&E is depreciated over 10 years Inventory grows at the same rate as the growth in COGS Assume that all other asset accounts grow at the same rate as sales. Accounts Payable grow at the same rate as COGS Accrued and deferred income taxes grows at the same rate as tax expense. Long-term debt increases by $1500 Unless otherwise stated, liability accounts grow at the same rate as sales Treasury Stock purchases equal $300 Average interest cost of all interest bearing debt is 2.5% Dividend payout ratio is 30% Tax rate is 35% Funding requirements should be financed with short-term debt 0 0 Dividends 188 Addition to retained earnings 563 Balance Sheet Balance Sheet Assets Year 1 com. size Year 1 Year 2 Cash and cash equivalents Marketable securities Accounts Receivables Inventory Prepaid expen. & other assets Total Current Assets Year o 640 28 8,200 3,142 1.323 13,333 Plant property and equipment (gross) Accumulated Depreciation PP&E (net) 7,607 3,000 4,607 Y2 Sales revenue decline by 1.5% Gross margin increases to 50% Inventory grows in line with COGS SG&A increases by 1.5% $800 of PP&E(net) is sold on January 1 for $800 cash. (Gross =$1000, Accumulated depreciation = $200) Annual depreciation expense declines by $ 60 Assume that all other asset accounts change at the same rate as sales. Accounts Payable grow change at the same rate as COGS Long-term debt declines by $150 Accrued and deferred income taxes change at the same rate as tax expense. Unless otherwise stated, liability accounts change at the same rate as sales. Treasury Stock purchase is $200. Average interest cost of all interest bearing debt is 2.1% Dividend payout ratio changes to 22% Tax rate is 35% 200 shares of $1 par value common stock is issued for $800. Excess cash is used to retire short-term debt Do not add significant amounts to cash unless Loans & notes payable is drawn down to zero. Total Assets 17,940 Liabilities & Shareholders' Equity Year 1 Year 1 Year 2 com. size Accounts payable Loans & notes payable (plug) Accrued income taxes Total Current Liabilities Year 0 3,148 2,423 1,322 6,893 Long-term debt Defered income taxes 2,800 195 Shareholders' Equity Common Stock at par Capital Surplus Retained earnings Less treasury stock Total equity 860 863 6,429 -100 8,052 Total liabilities & shareholder equity 17,940 Year 1 Year 2 Statement of Retained Earnings Beginning retained earnings +Net Income -dividends Ending retained earnings Statement of Cash Flows Year 1 Year 2 Net Income + Depreciation + (increase) decrease in A.R. + (increase) decrease in inventory + (increase) decrease in prepaid exp. + increase (decrease) in A.P. + increase (decrease) in accrued taxes + increase (decrease) in deferred taxes + =Cash Flow from operations + (increase) decrease in marketable sec. + (increase) decrease in PPE =Cash Flow from investing + increase (decrease) in loans and notes. + increase (decrease) in LTD + increase (decrease) in common stock - dividends - treasury stock =Cash flow from financing Beginning cash +Change in cash Ending cash