Using the data in the student spreadsheet file Ethan Allen Financials.xlsx, Use the percent of sales method and the following assumptions:

(1) Sales in FY 2019 will be $761.20

(2) The tax rate will be 25%

(3) Each item that changes with sales will be the five-year average percentage of sales

(4) Property, Plant & Equipment - Gross will increase to $650

(5) The dividend will be $0.90 per share. Use your judgment on all other items.

Questions to address on your worksheet:

a. What is the DFN in 2019? Is this a surplus or deficit?

b. Assume that the DFN will be absorbed by long-term debt and that the interest rate is 4% of LTD. Set up an iterative worksheet to eliminate it.

c. Create a chart of cash vs. sales and add a trend line. Is cash a consistent percentage of sales? Does this fit your expectations?

d. Use the regression tool to verify your results from part c. Is the trend statistically significant? Use at least three methods from the regression output to show why or why not.

e. Turn off iteration, and use the Scenario Manager to set up three scenarios:

1) Best CaseSales are 5% higher than expected.

2) Base CaseSales are exactly as expected.

3) Worst CaseSales are 5% less than expected. What is the DFN under each scenario?