a. Use the Dynamic Mattress model and the live spreadsheets on the books Web site at www.mhhe.com/bma
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a. Use the Dynamic Mattress model and the “live” spreadsheets on the book’s Web site at www.mhhe.com/bma to produce pro forma income statements, balance sheets, and statements of cash flows for 2010 and 2011. Assume business as usual except that now sales and costs are planned to expand by 30% per year, as are fixed assets and net working capital. The interest rate is forecasted to remain at 10% and stock issues are ruled out. Dynamic also sticks to its 60% dividend payout ratio.
b. What are the firm’s debt ratio and interest coverage under this plan?
c. Can the company continue to finance expansion by borrowing?
DividendA dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
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Principles of Corporate Finance
ISBN: 978-0077404895
10th Edition
Authors: Richard A. Brealey, Stewart C. Myers, Franklin Allen
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