Text of Proforma Question

The actual balance sheet for 2020 and the partially completed 2021 projected financial statements for MBA, Inc. are shown below.Use this financial data along with the assumptions below to complete the projected statements for 2021 by filling in the boxes.All the data are in $ millions.

Be careful.Each box is worth 1.25 points and there is no partial credit!Negative numbers (e.g., expenses on the income statement, etc.) must be shown in parentheses.ROUND calculations to the nearest million dollars as needed--DO NOT use decimal points in your answers!

Make the following assumptions when completing the financial statements:

1. Sales were $5,700 million in 2020 and are expected to decline by 15% in 2021.
2. Inventory turnover (Cost of Goods Sold/Average Inventory) is expected to equal 5.0 in 2021.
3. During 2021, the firm expects deterioration in its financial performance so it will not invest new in productive capacity. Indeed, the only planned acquisition of PP&E in 2021 is expected to cost $26 million and will be for a fleet of 650 delivery vehicles to increase the firm's ability to serve customers directly.In addition, MBA, Inc. expects to sell a large piece of land to raise cash. This land is not currently being used and can be sold at cost so there will no gain or loss on the sale.
4. Like in 2020, Interest Expense is expected to be 2% of the average of Short term debt (STD) and Long term debt (LTD) during the year.
5. Like in 2020, the firm will declare and pay a small amount of dividends in 2021.
6. There will be no issuance, repurchase or retirement of common stock in 2021.

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