Zieber Corporation's 2019 financial statements are shown below. Forecast Zeiber's 2020 income statement and balance sheets. Use the following assumptions: (1) Sales grow by 11.5%. (2) The ratios of expenses to sales, depreciation to fixed assets, cash to sales, accounts receivable to sales, and inventories to sales will be the same in 2020 as in 2019. (3) Zeiber will not issue any new stock or new long-term bonds. (4) The interest rate is 3% for short-term debt and 6.2% for long-term debt. (5) No interest is earned on cash. (6) Dividends grow at an 8% rate. (6) Calculate the additional funds needed (AFN). If new financing is required, assume it will be raised as notes payable. Assume that any new notes payable will be borrowed on the last day of the year, so there will be no additional interest expense for the new notes payable. If surplus funds are available, repurchase shares of stock. a. What are the forecasted levels of notes payable or surplus funds?
a. Vhat are the forecasted levels of notes payable or surplus funds? Key Input Data: Sales growth Tax rate Dividend growth rate S-T L-TI Used in the forecast 11.5% 21.0% 80% 3.0x this is the interest rate associated with short-term debt (notes payable 6.2% this is the interest rate associated with long-term debt Sales December 31 Income Statements: (in thousands of dollars) Forecasting 2019 2020 2020 2019 basis Ratios Inputs Forecast $455.150 Growth 11.50% Expenses (excluding depr. & amort $386.878 % of sales EBITDA $68,273 Depreciation and Amortization $16,385 % of fixed assets EBIT $51.887 Net Interest Expense $6.800 Interest rate(s) : beginning of gear debt(s) EBT $45,087 Taxes (21%) $9.468 Net Income $35.619 Common dividends (regular divide $12.554 Growth Addition to retained earnings (DRI $23,065 2019 Ratios 2020 Inputs 2020 Without AFH AFN Vith AF December 31 Balance Sheets (in thousands of dollars) Forecastinc 2019 basis Assets Cash $22.758 % of sales Accounts Receivable $72.824 % of sales Inventories $40.964 % of sales Total current assets $136.545 Fixed assets $204.818 % of sales Total assets $341.363 LiaMilities and equity Accounts payable $22.758 % of sales Accruals $31.861 % of sales Notes payable $10.000 Previous Total current liabilitie $64.618 Long-term debt $110,000 Previous Total liabilities $174.618 Common stock $60,000 Previous Retained Earnings $106.745 Previous . ARE Total common equity $166.745 Total liabilities and equ $341,363 $0.000 Total assets Planned liabilities and equity = Additional funds needed (AFN) or (surplus) = Required additional notes payable = Surplus funds a. Vhat are the forecasted levels of notes payable or surplus funds? Key Input Data: Sales growth Tax rate Dividend growth rate S-T L-TI Used in the forecast 11.5% 21.0% 80% 3.0x this is the interest rate associated with short-term debt (notes payable 6.2% this is the interest rate associated with long-term debt Sales December 31 Income Statements: (in thousands of dollars) Forecasting 2019 2020 2020 2019 basis Ratios Inputs Forecast $455.150 Growth 11.50% Expenses (excluding depr. & amort $386.878 % of sales EBITDA $68,273 Depreciation and Amortization $16,385 % of fixed assets EBIT $51.887 Net Interest Expense $6.800 Interest rate(s) : beginning of gear debt(s) EBT $45,087 Taxes (21%) $9.468 Net Income $35.619 Common dividends (regular divide $12.554 Growth Addition to retained earnings (DRI $23,065 2019 Ratios 2020 Inputs 2020 Without AFH AFN Vith AF December 31 Balance Sheets (in thousands of dollars) Forecastinc 2019 basis Assets Cash $22.758 % of sales Accounts Receivable $72.824 % of sales Inventories $40.964 % of sales Total current assets $136.545 Fixed assets $204.818 % of sales Total assets $341.363 LiaMilities and equity Accounts payable $22.758 % of sales Accruals $31.861 % of sales Notes payable $10.000 Previous Total current liabilitie $64.618 Long-term debt $110,000 Previous Total liabilities $174.618 Common stock $60,000 Previous Retained Earnings $106.745 Previous . ARE Total common equity $166.745 Total liabilities and equ $341,363 $0.000 Total assets Planned liabilities and equity = Additional funds needed (AFN) or (surplus) = Required additional notes payable = Surplus funds
