Prepare Pro-forma Financial Statement of the Abott Company by using below information. Abott company has the...

 

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Prepare Pro-forma Financial Statement of the Abott Company by using below information. Abott company has the following balance sheet and other data (data is in Millions): $15 Cash Accounts receivable Inventories Net fixed assets Total assets $ 10 25 Accounts payable Notes payable 20 40 Accrued wages and taxes 15 75 Long-term debt 30 Common equity 70 Total liabilities $150 and equity $150 Sales during the past year were $100, and they are expected to rise by 50% to $150 during next year. Also, during last year fixed assets were being utilized to only 85% of capacity, so Abott could have supported $100 of sales with fixed assets that were only 85% of last year's actual fixed assets. Assume that Abott's profit margin will remain constant at 5% and that the company will continue to pay out 60% of its earnings as dividends. What amount of nonspontaneous, additional funds (AFN) will be needed during the next year? Show how will you adjust AFN generated. Prepare Pro-forma Financial Statement of the Abott Company by using below information. Abott company has the following balance sheet and other data (data is in Millions): $15 Cash Accounts receivable Inventories Net fixed assets Total assets $ 10 25 Accounts payable Notes payable 20 40 Accrued wages and taxes 15 75 Long-term debt 30 Common equity 70 Total liabilities $150 and equity $150 Sales during the past year were $100, and they are expected to rise by 50% to $150 during next year. Also, during last year fixed assets were being utilized to only 85% of capacity, so Abott could have supported $100 of sales with fixed assets that were only 85% of last year's actual fixed assets. Assume that Abott's profit margin will remain constant at 5% and that the company will continue to pay out 60% of its earnings as dividends. What amount of nonspontaneous, additional funds (AFN) will be needed during the next year? Show how will you adjust AFN generated.

Answer rating: 100% (QA)

To calculate the additional funds needed AFN for the next year we need to consider the projected inc... View the full answer