CHAPTER 5: Financial Statement Forecasting164Problems1.Using the data in the student spreadsheet file Ethan Allen Financials.xlsx(to find the student spreadsheets for Financial Analysis with MicrosoftExcel, eighth edition, go to www.cengagebrain.com) forecast the June 30,2017 income statement and balance sheet for Ethan Allen. Use the percentof sales method and the following assumptions: (1) sales in FY 2017 willbe $797.3359; (2) the tax rate will be 35%; (3) each item that changes withsales will be the five-year average percentage of sales; (4) net fixed assetswill increase to $300; and (5) the common dividend will be $0.75 pershare. Use your judgment on all other items.a.What is the discretionary financing needed in 2017? Is this a surplusor deficit?b.Assume that the DFN will be absorbed by long-term debt and that theinterest rate is 4% of LTD. Set up an iterative worksheet to eliminate it.c.Create a chart of cash versus sales and add a trend line. Is cash aconsistent percentage of sales? Does this fit your expectations?TABLE 5-3FUNCTIONS INTRODUCEDIN THIS CHAPTERPurposeFunctionPageCalculate an arithmetic averageAverage(NUMBER1, NUMBER2, ...)142Calculate straight-line depreciationSLN(COST, SALVAGE, LIFE)145Forecast future outcomes based on a time trendTREND(KNOWN_YS, KNOWN_XS, NEW_XS, CONST)154Find the intercept of a regression equationINTERCEPT(KNOWN_YS, KNOWN_XS)163Find the slope of a regression equationSLOPE(KNOWN_YS, KNOWN_XS)163