The following is the excel problem for Fin 3320 Summer 2013. Fill in all the blanks of the financial statements and
the proforma, including the option at the bottom of the page. Also fill in the blanks for the three questions re
debt increase, net income and dividends paid.
Turn in hard copy (do not email to me) once complete. The excel problem is due July 31, 2013.
	Chapter 4 - Section 2
	A Simple Financial Planning Model
A financial plan begins with the current financial statements. The income statement and balance sheet for
Computerfield Corporation are:
	ALPHA/BETA CORPORATION				ALPHA/BETA CORPORATION
	Income Statement				Balance Sheet
	Sales		$ 1,000		Assets	$ 500		Debt	$ 250
	Costs		800					Equity	250
	Net income				Total			Total
To find the funds the company will need to raise next year to funds its sales gorwth, we begin with the
forecasted sales growth. In this case, we will assume that the sales growth for the next year will be:
	Sales growth:		25%
If sales grow, by this amount, we can construct the pro forma, or projected financial statements. Under the
assumption that all of the variables will grow by the sales growth rate, the pro forma statements will be:
	ALPHA/BETA CORPORATION				ALPHA/BETA CORPORATION
	Pro forma Income Statement				Pro forma Balance Sheet
	Sales				Assets			Debt
	Costs							Equity
	Net income				Total			Total
The advantage of financial planning is that it allows us to see what could happen in the future and the
options available. For example, in this case the following must have occurred:
	Debt increased by:
	Net income was:
	So, dividends paid must have been:
Of course, that is not the only option available to Alpha/Beta. The company could also keep all of the net
income as retained earnings. If this happens, the company will need to repurchase debt in order
to keep the balance sheet in balance. The proforma balance sheet under this scenario will be:
					ALPHA/BETA CORPORATION
					Pro forma Balance Sheet
					Assets			Debt
								Equity
					Total			Total
Remember, the purpose of financial planning is not to tell us what to do, but rather allow us to see what
might happen and plan for any contingencies.