Question
Your firm's balance sheet at the end of the most recent year looks like this (all numbers in millions): Cash 100 Accounts Payable 100 Inventory
Your firm's balance sheet at the end of the most recent year looks like this (all numbers in millions):
Cash | 100 | Accounts Payable | 100 | |
Inventory | 300 | Accrued expenses | 100 | |
Accounts receivable | 200 | Current liabilities | 200 | |
Fixed assets | 1000 | LTD | 700 | |
Total assets | 1600 | Total liabilities | 900 | |
Common stock | 500 | |||
Retained earnings | 200 | |||
Total equity | 700 |
Last year, your firm had $1.5 billion in sales revenue, $450 million in EBITDA, and a 15% profit margin. Your projection is that the firm will grow its revenue at 20% each of the next three years while increasing their profitability to a 22% profit margin. You can assume for now that all assets and current liabilities will stay at their existing levels as a percent of sales.
Your firm went public last year, and has a follow-up equity offering planned next year for an additional $200 million in equity (i.e., they will issue $200 million in stock). There will be no other equity issuances and no share repurchases during the next three years. The firm will keep 50% of its earnings during this period, paying the other half as dividends. Any extra cash will be used to pay down long-term debt, which is the firms only interest-bearing liability; any additional funding needed will be obtained through new issuances of long-term debt.
Use this information to forecast the firm's next three years of common equity, retained earnings, and long-term debt, and then report the long-term debt figure at the end of year three. Answer in millions (as the above figures are), without the dollar sign and rounded to the nearest million: e.g., $45,810,031 would be 46.
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