1, FORCASTING PRO FORMA FINANCIAL STATEMENTS: PREPARE A PRO FORMA INCOME STATEMENT AND BALANCE SHEET FOR WEBB ENTERPRISES, FOUND BELOW, AND ESTIMATE THE FIRMS FCF FOR 2011. WHERE REVENUES ARE EXPECTED TO GROW BY 20% IN 2011. MAKE THE FOLLOWING ASSUMPTIONS IN MAKING YOUR FORECAST OF THE FIRMS BALANCE SHEET FOR 2011: A. The income statement expenses are a constant percent of revenues except for interest, which remains equal in dollar amount to the 2010 level, and taxes, which equal 40% of earnings before taxes. B. The cash and marketable securities balance remains equal to $500, and the remaining current asset accounts and fixed assets increase in proportion to revenues for 2010. C. Net property, plant, and equipment increase in proportion to the increase in revenues. D. Accounts payable increase in proportion to firm revenues. E. Owners equity increases by the amount of firm net income for 2011 (no cash dividends are paid). F. Long term debt remains unchanged, and short term debt changes in an amount that balances the balance sheet. BALANCE SHEET 2010 CASH AND MARKETABLE SECURITIES $ 500 ACCOUNTS RECEIVABLE 6,000 INVENTORIES 9,500 CURRENT ASSETS 16,000 NET PROPERTY PLANT AND EQUIPMENT 17,000 TOTAL 33,000 ACCOUNT PAYABLE 7,200 SHORT TERM DEBT 6,800 CURRENT LIABILITIES 14,000 LONG TERM DEBT 7,000 TOTAL LIABILITIES 21,000 TOTAL OWNERS EQUITY 12,000 TOTAL LIABILITIES AND OWNERS EQUITY 33,000 INCOME STATEMENT 2010 REVENUES 30,000 COST OF GOODS SOLD (20,000) GROSS PROFIT 10,000 OPERATING EXPENSES (8,000) NET OPERATING INCOME 2,000 INTEREST EXPENSE (900) EARNINGS BEFORE TAXES 1,100 TAXES (400) NET INCOME 700 USING YOUR PRO FORMA FINANCIAL STATEMENTS FROM THE ABOVE INFORMATION, ESTIMATE THE FIRMS FCF FOR 2011