The following tables contain financial statements of Dynastatics Corporation. Although the company has not been growing it now plans to expand and will increase net fixed assets (that is, assets net of depreciation) by 200,00 per year for the next 5 years and it forecasts that the ratio of revenues to total assets will reamin at 1.5. Annual depreciation is 10% of net fixed assets at the beginning of the year. Fixed costs are expected to reamin at $56,000 and variable costs at 80% revenue. The company's policy is to pay out two-thirds of net income as dividends and to maintain a book debt ratio of 25% of total capital.

a.) produce a set of financial statements for 2016. Assume net working capital will equal 50% of fixed assets

b.) Now assume that the balancing item is debt and that no equity is to be issued. Produce a completed pro forma balance sheet for 2016. What is the projected debt ratio for 2016?

Term Financial Planning INCOME STATEMENT, 2015 (Figures in $ thousands) Revenue Fixed costs $1,800 Variable costs (80% of revenue) 56 Depreciation 1,440 80 Interest (8% of beginning-of-year debt) Taxable income 24 200 Taxes (at 40%) 80 Net income $ 120 Dividends $80 Addition to retained earnings $40 BALANCE SHEET, YEAR-END (Figures in $ thousands) 2015 Assets Net working capital $ 400 Fixed assets 800 Total assets $1,200 Liabilities and shareholders' equity Debt $ 300 Equity 900 Total liabilities and shareholders' equity $1,200