The Loftis Company is preparing its pro forma financial statements for the next year using this model. The abbreviated financial statements are presented below Sales growth Tax rate 20% 34% Income Statement Sales Costs Depreciation Interest Taxable income Taxes Net income $780,000.00 415,000.00 135,000.00 68,000.00 162,000.00 55,080.00 $ 106,920.00 Dividends Additions to retained earnings $30,000.00 $ 76,920.00 Balance Sheet Assets Liabilities and Equity $240,000.00 1,350,000.00 $ 1,590,000.00 Total debt Owners' equity Total debt and equity $880,000.00 710,000.00 $ 1,590,000.00 Current assets Net fixed assets Total assets Calculate each of the parameters necessary to construct the pro forma balance sheet. Construct the pro forma balance sheet. What is the total debt necessary to balance the pro forma balance sheet? In this financial planning model, show that it is possible to solve algebraically for the amount of new borrowing. a. b. c. a. Calculate the following ratios for financial planning: Cost percentage Depreciation percentage Interest rate Tax rate Payout ratio Fixed assets/Total assets Capital intensity ratio 0.53 0.10 0.08 0.34 0.28 0.85 1.73 b. Construct the pro forma financial statements using the parameters you calculated. Your pro forma balance sheet should balance. Loftis Company Pro forma Income Statement Sales Costs Depreciation nterest Taxable income Taxes Net income $936,000.00 $498,000.00 $162,000.00 $81,600.00 $ 194,400.00 66,096.00 $ 128,304.00 Dividends $36,000.00 Additions to retained earnings $222,064.62 Loftis Company Pro forma Balance Sheet Assets Liabilities and Equity Current assets Net fixed assets Total assets $ 288,000.00 $1,620,000.00 $ 1,908,000.00 Total debt Owners' equity $ 880,000.00 932,064.62 $ 1,812,064.62 Total debt and equity The Loftis Company is preparing its pro forma financial statements for the next year using this model. The abbreviated financial statements are presented below Sales growth Tax rate 20% 34% Income Statement Sales Costs Depreciation Interest Taxable income Taxes Net income $780,000.00 415,000.00 135,000.00 68,000.00 162,000.00 55,080.00 $ 106,920.00 Dividends Additions to retained earnings $30,000.00 $ 76,920.00 Balance Sheet Assets Liabilities and Equity $240,000.00 1,350,000.00 $ 1,590,000.00 Total debt Owners' equity Total debt and equity $880,000.00 710,000.00 $ 1,590,000.00 Current assets Net fixed assets Total assets Calculate each of the parameters necessary to construct the pro forma balance sheet. Construct the pro forma balance sheet. What is the total debt necessary to balance the pro forma balance sheet? In this financial planning model, show that it is possible to solve algebraically for the amount of new borrowing. a. b. c. a. Calculate the following ratios for financial planning: Cost percentage Depreciation percentage Interest rate Tax rate Payout ratio Fixed assets/Total assets Capital intensity ratio 0.53 0.10 0.08 0.34 0.28 0.85 1.73 b. Construct the pro forma financial statements using the parameters you calculated. Your pro forma balance sheet should balance. Loftis Company Pro forma Income Statement Sales Costs Depreciation nterest Taxable income Taxes Net income $936,000.00 $498,000.00 $162,000.00 $81,600.00 $ 194,400.00 66,096.00 $ 128,304.00 Dividends $36,000.00 Additions to retained earnings $222,064.62 Loftis Company Pro forma Balance Sheet Assets Liabilities and Equity Current assets Net fixed assets Total assets $ 288,000.00 $1,620,000.00 $ 1,908,000.00 Total debt Owners' equity $ 880,000.00 932,064.62 $ 1,812,064.62 Total debt and equity
