Question 7

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 2021 are expected to grow at a rate of 10% with respect to the values of 2020. Assume the company pays out 65% of its net income.

   Table 1
   Income Statement, 2020			Balance Sheet, 2020
   Sales	9,000,000		Assets
   Costs except Depr.	-3,500,000		Cash and Equivalents		2,156,000
   EBITDA	5,500,000		Accounts Receivable		2,960,000
   Depreciation	-25,900		Inventories		90,000
   EBIT	5,474,100		Total Current Assets		5,206,000
   Interest Expense (net)	-100,500		Property Plant & Equipment		2,190,000
   Pretax Income	5,373,600		Total Assets		7,396,000
   Income Tax	-1,880,760		Liabilities &Equity
   Net Income	3,492,840		Accounts Payable		2,000,000
   			Debt		1,000,000
   			Total Liabilities		3,000,000
   			Stockholders' Equity		4,396,000
   			Total Liabilities and Equity		7,396,000

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