Sales growth 15% Tax rate 21% Income Statement Sales $1,020,000.00 Costs 595,000.00 Depreciation 122,500.00 Interest 76,000.00 Taxable income $226,500.00 Taxes 47,565.00 Net income $178,935.00 Dividends $60,000.00 Additions to retained earnings $118,935.00 Balance Sheet Assets Liabilities and Equity Current assets $340,000.00 Total debt $880,000.00 Net fixed assets $1,102,500.00 Owners' equity $562,500.00 Total assets $1,442,500.00 Total debt and equity $1,442,500.00 Note: Beginning Fixed Assets = $1,225,000 

a. Calculate the necessary ratios and parameters needed for financial planning in preparation for constructing the proforma balance sheet.

b.  Construct the proforma financial statements (i.e., income statement and balance sheet) using the parameters you calculated. Your proforma balance sheet should balance. What is the total debt necessary to balance the proforma balance sheet? c. (20 Points) In this financial planning model, show that it is possible to solve algebraically for the amount of new borrowing.

Answer rating: 100% (QA)

a The necessary ratios and parameters needed for financial planning are 1 Sales growth rate 15 2 Tax ... View the full answer