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The Year 1 financial statements for the firm are shown below: Balance Sheet as of December 31, Year 1 (thousands of dollars) Cash $90,000 Accounts
The Year 1 financial statements for the firm are shown below: | ||||||||
Balance Sheet as of December 31, Year 1 (thousands of dollars) | ||||||||
Cash | $90,000 | Accounts payable | $180,000 | |||||
Receivables | $180,000 | Notes payable | $78,000 | |||||
Inventories | $360,000 | Accruals | $90,000 | |||||
Total current assets | $630,000 | Total current liabilities | $348,000 | |||||
Net fixed assets | $720,000 | Common stock | $900,000 | |||||
Retained earnings | $102,000 | |||||||
Total assets | $1,350,000 | Total liabil & equity | $1,350,000 | |||||
Income Statement for Year 1 (thousands of dollars) | ||||||||
Sales | $1,800,000 | |||||||
Operating costs | $1,639,860 | |||||||
Earnings before interest and taxes | $160,140 | |||||||
Interest | $10,140 | |||||||
Earnings before taxes | $150,000 | |||||||
Taxes (40%) | $60,000 | |||||||
Net income | $90,000 | |||||||
Dividends (60%) | $54,000 | |||||||
Addition to retained earnings | $36,000 | |||||||
Suppose that in Year 2, sales increase by 10 percent over Year 1 sales. Construct the pro forma | ||||||||
financial statements using the constant growth method. Assume the firm operated at full capacity | ||||||||
in Year 1. What will be the external funding requirement? |
Please show calculations in Excel so I can follow and understand how to solve this.
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