1. Using the data in the student spreadsheet file Ethan Allen Financials.xlsx (to find the student spreadsheets for Financial Analysis with Microsoft Excel, ninth edition, go to (www.cengage.com/finance/mayes/analysis/9e), forecast the June 30, 2019 income statement and balance sheet for Ethan Allen. Use the percent of sales method and the following assumptions: (1) Sales in FY 2019 will be $761.20; (2) The tax rate will be 25% ; (3) Each item that changes with sales will be the five-year average percentage of sales; (4) Property, Plant & Equipment - Gross will increase to $675; and (5) The dividend will be $0.90 per share. Use your judgment on all other items. a. What is the DFN in 2019? Is this a surplus or deficit? b. Assume that the DFN will be absorbed by long-term debt and that the interest rate is 4% of LTD. Set up an iterative worksheet to eliminate it. c. Create a chart of cash vs. sales and add a trend line. Is cash a consistent percentage of sales? Does this fit your expectations? d. Use the regression tool to verify your results from part c. Is the trend statistically significant? Use at least three methods from the regression output to show why or why not. e. Turn off iteration, and use the Scenario Manager to set up three scenarios: 1) Best Case-Sales are 5% higher than expected. 2) Base Case-Sales are exactly as expected. 3) Worst Case-Sales are 5% less than expected. What is the DFN under each scenario? Sales Ethan Allen Interiors Inc. Income Statement (Industrial) All figures in millions of U.S. Dollar, except per share items Cost of Goods Sold (COGS) incl. D&A Gross Income SG&A Expense EBIT (Operating Income) Interest Expense Other Income - Net Unusual Expense-Net Pretax Income Income Taxes Net Income Jun '18 766.784 Jun '17 763.385 350.820 343.662 351.966 343.437 340.163 Actual Jun '16 Jun '15 794.202 754.600 Jun '14 Jun '19 746.659 746.684 337.193 415.964 419.723 442.236 411.163 406.496 367.097 361.773 353.057 345.229 336.860 48.867 57.950 89.179 65.934 69.636 409.491 357.164 52.327 0.325 1.223 1.618 5.957 7.540 0.087 0.525 0.268 0.395 1.206 0.306 0.000 0.000 0.000 0.000 4.500 0.000 18.380 49.067 56.995 87.956 12.696 20.801 31.319 19.541 36.371 36.194. 56.637 37.142 56.683 62.402 33.860 19.471 8.162 42.931 25.698 EPS (recurring) 1.32 1.29 2.00 1.38 1.47 EPS (diluted) 1.32 1.29 2.00 1.27 1.47 0.96 Diluted Shares Outstanding 27.63 27.96 28.32 29.18 29.28 26.75 Total Shares Outstanding 26.53 27.45 27.75 28.41 28.93 Dividends per Share 0.76 0.74 0.62 0.50 0.40 0.76 Payout Ratio 57.72 57.36 31.00 39.37 27.21 EBITDA 68.70 78.07 108.53 85.08 87.57 71.93 EBIT 48.87 57.95 89.18 65.93 69.64 33.95 Depreciation & Amortization Expense 19.83 20.12 19.35 19.14 17.93 19.60 Source: FactSet Fundamentals Ethan Allen Interiors Inc. Balance Sheet (Industrial) All figures in millions of US. Dollar, except per share items Assets Cash Only Total Short Term Investments Short-Term Receivables Inventories Other Current Assets Total Current Assets Property, Plant & Equipment - Gross Accumulated Depreciation Net Property, Plant & Equipment Other Long-Term Assets Total Assets Liabilities & Shareholders' Equity ST Debt & Curr. Portion LT Debt Accounts Payable Other Current Liabilities Jun '18 Jun '17 Jun '16 Jun '15 Jun '14 Actual Jun '19 22.363 57.701 0.000 0.000 12.364 12.293 52.659 76.182 109.176 0.000 2.198 18.153 20.824 9.467 163.012 149.483 162.323 12.547 151.916 12.426 0.000 14.247 146.275 162.389 27.831 270.674 305.629 601.709 19.599 18.830 216.290 16.686 23.621 23.755 214.425 243.098 248.204 611.027 605.219 598.264 594.912 343.124 335.021 324.649 317.877 313.553 267.903 270.198 273.615 277.035 288.156 48.105 54.926 55.590 59.599 60.649 530.433 568.222 577.409 607.308 654.434 245.246 510.351 Total Current Liabilities Long-Term Debt Other Liabilities Total Liabilities 0.584 2.731 3.001 3.341 18.768 16.961 15.437 101.908 106.753 104.909 121.260 126.445 123.347 1.096 11.608 38.837 24.207 29.273 23.023 146.563 167.326 185.207 0.501 0.550 18.946 24.320 118.6821 111.226 140.969 136.047 35.485 86.791 122.826 74.227 130.411 0.516 21.577 20.509 23.080 236.773 286.967 146.422 Common Stock Par/Carry Value 0.490 0.490 0.489 0.489 0.486 Additional Paid-In Capital/Capital Surplus 376.950 377.550 374.972 370.914 365.733 Retained Eamings 669.013 661.976 646.315 607.079 584.395 Treasury Stock and Other Deductions from Equity 662.722 639.310 629.574 607.947 583.147 Total Shareholders' Equity 383.731 400.706 392.202 370.535 367.467 363.866 Total Liabilities & Shareholders' Equity 530.433 568.222 577.409 607.308 654.434 510.351 Source: FactSet Fundamentals