Use the financial data provided below to perform the following pieces of analysis:

1. a 2021 forecast of the income statement and balance sheet

2. Answer the question (below) related to your forecast and ratio computations.

Use the assumptions below to perform the forecast:

1. Sales are expected to grow 25% in 2021.

2. The firm will need to grow Property, Plant, & Equipment by 4,000 in 2021.

3. Depreciation (on the income statement) will be $1,500 in 2021.

4. Fixed Operating Costs will increase by $600 in 2021

5. The Note Payable and Long-Term debt will remain unchanged in your initial forecast

6. Tax and Dividend assumptions will be unchanged from 2020

7. Cash will remain at $500

8. Accrued Wages & Taxes will grow with Sales.

9. Management wants to achieve the following operational goals for 2021. It believes the goals are realistic and wants the forecast to reflect them:

Inventory Turnover = 12, Receivables Turnover = 12, Payables Turnover = 36.

10. All other items will follow standard growth-based forecast assumptions

Interpret your AFN answer. What are the implications of this?

Income Statement Forecast 2021 Net Sales Cost of Goods Sold Gross Profit Depreciation Fixed Operating Costs Earnings Before Interest and Taxes Interest Expense Taxable income Tax Expense Net Income Common Dividends Additions to Retained Earnings 2018 2019 2020 $ 12,000 $ 15,000 $ 20,000 $ 8,000 $ 9,000 $ 13,000 $ 4,000 $ 6,000 $ 7,000 $ 200 $ 300 $ 1,100 $ 1,800 $ 2,000 $ 2,700 $ 2,000 $ 3,700 $ 3,200 $ 103.6 $ 191.2 $ 280.0 $ 1,896 $ 3,509 $ 2,920 $ 759 $ 1,404 $ 1,168 $ 1,138 $ 2,105 $ 1,752 $ 228 $ 421 $ 350 $ 910 $ 1,684 $ 1,402 Tax rate Common Shares Outstanding Dividend Payout Ratio Current Stock Price 40.00% 2,000 20.00% 7.14 $ 40.00% 2,000 20.00% 20.40 $ 40.00% 2,000 20.00% 17.76 $ Balance Sheet Forecast 2021 2020 500 Cash Accounts Receivable Inventories Total Current Assets 2018 400 2,000 1,200 3,600 2019 500 3,000 2,000 5,500 3,500 3,000 7,000 Property, Plant, & Equipment Less: Accumulated Depreciation Net Fixed Assets Total Assets 8,000 1,600 6,400 10,000 9,500 1,900 7,600 13,100 12,000 3,000 9,000 16,000 Accounts Payable Accrued Wages and Taxes Notes Payable Total Current Liabilities 1,000 600 196 1,796 1,300 600 712 2,612 1,509 600 1,000 3,109 Long-Term Debt Total Liabilities 1,400 3,196 2,000 4,612 3,000 6,109 Common Stock Retained Earnings Total Equity 2,000 4,804 6,804 2,000 6,488 8,488 2,000 7,891 9,891 Total Liabilities and Equity 10,000 13,100 16,000 Additional Funds Needed (AFN) Income Statement Forecast 2021 Net Sales Cost of Goods Sold Gross Profit Depreciation Fixed Operating Costs Earnings Before Interest and Taxes Interest Expense Taxable income Tax Expense Net Income Common Dividends Additions to Retained Earnings 2018 2019 2020 $ 12,000 $ 15,000 $ 20,000 $ 8,000 $ 9,000 $ 13,000 $ 4,000 $ 6,000 $ 7,000 $ 200 $ 300 $ 1,100 $ 1,800 $ 2,000 $ 2,700 $ 2,000 $ 3,700 $ 3,200 $ 103.6 $ 191.2 $ 280.0 $ 1,896 $ 3,509 $ 2,920 $ 759 $ 1,404 $ 1,168 $ 1,138 $ 2,105 $ 1,752 $ 228 $ 421 $ 350 $ 910 $ 1,684 $ 1,402 Tax rate Common Shares Outstanding Dividend Payout Ratio Current Stock Price 40.00% 2,000 20.00% 7.14 $ 40.00% 2,000 20.00% 20.40 $ 40.00% 2,000 20.00% 17.76 $ Balance Sheet Forecast 2021 2020 500 Cash Accounts Receivable Inventories Total Current Assets 2018 400 2,000 1,200 3,600 2019 500 3,000 2,000 5,500 3,500 3,000 7,000 Property, Plant, & Equipment Less: Accumulated Depreciation Net Fixed Assets Total Assets 8,000 1,600 6,400 10,000 9,500 1,900 7,600 13,100 12,000 3,000 9,000 16,000 Accounts Payable Accrued Wages and Taxes Notes Payable Total Current Liabilities 1,000 600 196 1,796 1,300 600 712 2,612 1,509 600 1,000 3,109 Long-Term Debt Total Liabilities 1,400 3,196 2,000 4,612 3,000 6,109 Common Stock Retained Earnings Total Equity 2,000 4,804 6,804 2,000 6,488 8,488 2,000 7,891 9,891 Total Liabilities and Equity 10,000 13,100 16,000 Additional Funds Needed (AFN)