Cooley Textile's 2001 financial statements are shown below. Cooley Textile: Income Statement for December 31, 2001 (Thousands

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Cooley Textile's 2001 financial statements are shown below.

Cooley Textile's 2001 financial statements are shown below.
Cooley Textile: Income

Cooley Textile: Income Statement for December 31, 2001 (Thousands of Dollars)
Sales..................................................... $36,000
Operating costs.......................................... 32,440
Earnings before interest and taxes................... $ 3,560
Interest....................................................... 560
Earnings before taxes.................................. $ 3,000
Taxes (40%)............................................... 1,200
Net income............................................. $ 1,800
Dividends (45%).......................................... $810
Addition to retained earnings........................... $990
Suppose 2002 sales are projected to increase by 15 percent over 2001 sales. Determine the additional funds needed. Assume that the company was operating at full capacity in 2001, that it cannot sell off any of its fixed assets, and that any required financing will be borrowed as notes payable. Also, assume that assets, spontaneous liabilities, and operating costs are expected to increase in proportion to sales. Use the projected financial statement method to develop a pro forma balance sheet and income statement for
December 31, 2002. Use the pro forma income statement to determine the addition to retained earnings.

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
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Related Book For  book-img-for-question

Fundamentals of Financial Management

ISBN: 978-0324272055

10th edition

Authors: Eugene F. Brigham, Joel F. Houston

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