SHOW YOUR WORK AND CALCULATIONS

Chapter 16 Homework Lewis Company Pro Forma Income Statement December 31, 2007 (Thousands of Dollars) 2007 Sales Operating costs EBIT Interest EBT Taxes (40%) Net income $8,000 7,450 $ 550 150 $ 400 160 Less: Dividends: $1.04 150 Addition to R.E.= $ 84 156 Lewis Company Pro Forma Balance Sheet December 31, 2007 (Thousands of Dollars) 2007 $ 80 240 Cash Receivables Inventories Total current assets $l, 040 Fixed assets 3, 200 Total assets $4, 240 Accounts Payable Accrued liab. Notes payable 252 Total current liabilities $452 Long-term debt Total debt $1, 696 Common stock 1, 605 Retained Earnings Total liabilities and equity A240 160 1, 244 939 On a separate piece of paper (preferably using Excel),complete th . I. It expects sales to increase by 20% during 2008 and expects dividends e following exercises share to increase to $1.10, based upon 150 shares outstanding. Fixed Assets are closely tied to sales levels. Use the Percent of Sales met to project the 2008 financial statements for the firm. How much AFN d the firm require? 2. The firm must maintain a current ratio of 2.3 and a total debt to inve sted capital ratio of 40%. How much financing will be obtained using notes payable, long-term debt and common stock