Topeka Adhesives Financial Forecasting

Two sisters are in the process of negotiating a number of large contracts for the coming year (1996) and product inquires are markedly higher. Sales are expected to increase in the next three years, more than doubling by the end of 1998. Partners estimate sales of $1,933,100 in 1996, $2,609,700 in 1997 and $3,131,600 in 1998. The downside to this growth is that such large growth will require external financing and could cause managerial difficulties.

Forecasting considerations

The table below shows the 1996 pro forma balance sheet and indicates $226,100 needs to be raised.

Topeka's 1996 Pro Forma Balance Sheet (000s) Assets Liabilities & Equity Current Assets 5485.2 Payables & Accruals $141.1 Net Fixed 267.5 Debt Due 20.0 5752.7 Long Term Debt 60.0 Equity 305.5 Funds Needed 226.1 5752.7