Question: Can you fill out the liabilities below? Create pro forma financial statements from the information provided below Year 1 Sales revenues increase 3.5% Gross margin
Can you fill out the liabilities below?
| Create pro forma financial statements from the information provided below | |||||||||
| Year 1 | |||||||||
| Sales revenues increase 3.5% | |||||||||
| Gross margin is 50% | |||||||||
| SG&A increases 1.2% | |||||||||
| $2000 of PP&E is purchased on January 1, | |||||||||
| New PP&E is depreciated over 10 years | |||||||||
| Inventory grows in line with COGS | |||||||||
| Assume that all other asset accounts grow in line with sales (3.5%). | |||||||||
| Accounts Payable grow in line with COGS | |||||||||
| Accrued and deferred income taxes grows in line with taxes. | |||||||||
| Long-term debt declines by $200 | |||||||||
| Unless otherwise stated, liability accounts grow in line with sales (3.5%) | |||||||||
| Treasury Stock purchases equal $300 | |||||||||
| Average interest cost of all interest bearing debt is 1.6% | |||||||||
| Dividend payout ratio is 22% | |||||||||
| Tax rate is 35% | |||||||||
| Funding requirements should be financed with short-term debt | |||||||||
| Y2 | |||||||||
| Sales revenue decline by 2.0% | |||||||||
| Gross margin declinesto 48% | |||||||||
| Inventory grows in line with COGS | |||||||||
| SG&A declines by 1% | |||||||||
| $800of PP&E is sold on January 1 for $600 cash. (Gross =$800, Accumulated depreciation = $200) | |||||||||
| Annual depreciation expense declines by $ 80 | |||||||||
| Assume that all other asset accounts grow in line with sales. (-2.0%) | |||||||||
| Accounts Payable grow in line with COGS | |||||||||
| Long-term debt declines by $150 | |||||||||
| Accrued and deferred income taxes grows in line with taxes. | |||||||||
| Unless otherwise stated, liability accounts grow in line with sales (-2.0%) | |||||||||
| Treasury Stock purchase is $100. | |||||||||
| Average interest cost of all interest bearing debt is 1.8% | |||||||||
| Dividend payout ratio changes to 25% | |||||||||
| Tax rate is 35% | |||||||||
| Funding requirements should be financed with short-term debt | |||||||||
| Excess cash is used to retire short-term debt | |||||||||
| 100 shares of $1 par value common stock is issued for $300. | |||||||||
| Do not add significant amounts to cash unless Loans & notes payable is drawn down to zero. | |||||||||
| Income Statement | ||||
| Year 0 | Year 1 | Year 2 | ||
| Revenues | 17,000 | 17,595 | 17,243 | |
| Cost of goods sold | 9,200 | 9,522 | 9,332 | |
| Gross profit | 7,800 | 8,073 | 7,911 | |
| SG&A | 4,790 | 4,846 | 4,797 | |
| Depreciation | 1,700 | 1,700 | 1,620 | |
| Operating Profit | 1,310 | 1,527 | 1,494 | |
| Interest expense | 155 | 24 | 27 | |
| Income before taxes | 1,155 | 1,503 | 1,467 | |
| Taxes @35% | 404 | 526 | 514 | |
| Net Income | 751 | 977 | 953 | |
| Dividends | 225 | 215 | 238 | |
| Addition to retained earnings | 526 | 762 | 715 |
| Balance Sheet | ||||
| Assets | ||||
| Year 0 | Year 1 | Year 2 | ||
| Cash and cash equivalents | 640 | 640 | 640 | |
| Marketable securities | 28 | 28 | 28 | |
| Accounts Receivables | 8,200 | 8,487 | 8,317 | |
| Inventory | 3,142 | 3,480 | 3,480 | |
| Prepaid expen. & other assets | 1,323 | 1,369 | 1,342 | |
| Total Current Assets | 13,333 | 14,004 | 13,807 | |
| Plant property and equipment (gross) | 7,607 | 7,607 | 7,607 | |
| Accumulated Depreciation | 3,000 | 3,200 | 3,320 | |
| PP&E (net) | 4,607 | 6,407 | 5,487 | |
| Total Assets | 17,940 | 20,411 | 19,294 |
| Liabilities & Shareholders' Equity | ||||
| Year 0 | Year 1 | Year 2 | ||
| Accounts payable | 3,148 | |||
| Loans & notes payable (plug) | 2,923 | |||
| Accrued income taxes | 1,322 | |||
| Total Current Liabilities | 7,393 | |||
| Long-term debt | 2,300 | |||
| Defered income taxes | 195 |
Step by Step Solution
There are 3 Steps involved in it
1 Expert Approved Answer
Step: 1 Unlock
Question Has Been Solved by an Expert!
Get step-by-step solutions from verified subject matter experts
Step: 2 Unlock
Step: 3 Unlock
Study Help