QUESTION 1

Use the following information on Company X and perform pro-forma financial modeling using a percentage sales method to answers the next two questions. Sales in 2023 are expected to grow at a rate of 5% with respect to the values of 2022. Assume the company pays out 55% of its net income.

Table 1
Income Statement, 2022			Balance Sheet, 2022
Sales	11,000,000		Assets
Costs except Depr.	-8,500,000		Cash and Equivalents		4,156,000
EBITDA	2,500,000		Accounts Receivable		3,960,000
Depreciation	-105,900		Inventories		500,000
EBIT	2,394,100		Total Current Assets		8,616,000
Interest Expense (net)	-100,500		Property Plant & Equipment		2,500,000
Pretax Income	2,293,600		Total Assets		11,116,000
Income Tax	-802,760		Liabilities &Equity
Net Income	1,490,840		Accounts Payable		4,000,000
			Debt		2,000,000
			Total Liabilities		6,000,000
			Stockholders' Equity		5,116,000
			Total Liabilities and Equity		11,116,000

Question: Use the percent sales method to forecast the value of next year s stockholder s equity for firm X.

10 points

QUESTION 2

Question: Use the percent sales method to estimate the firm s net new financing for firm X.