Consider the following simplified financial statements for the Wims Corporation (assuming no income taxes): Income Statement...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Consider the following simplified financial statements for the Wims Corporation (assuming no income taxes): Income Statement Sales Costs Net income $40,000 34,160 Assets Sales Costs Net income $ 5,840 Total $26,000 Total $26,000 The company has predicted a sales increase of 20 percent. Assume the company pays out half of net income in the form of a cash dividend. Costs and assets vary with sales, but debt and equity do not. Balance Sheet $26,000 Debt $ 7,000 Equity 19,000 Prepare the pro forma statements. (Input all amounts as positive values. Do not round intermediate calculations and round your answers to the nearest whole dollar amount.) Pro forma income statement External financing needed Assets Total Pro forma balance sheet Debt Equity Total What is the external financing needed? (Do not round intermediate calculations. A negative answer should be indicated by a minus sign.) Consider the following simplified financial statements for the Wims Corporation (assuming no income taxes): Income Statement Sales Costs Net income $40,000 34,160 Assets Sales Costs Net income $ 5,840 Total $26,000 Total $26,000 The company has predicted a sales increase of 20 percent. Assume the company pays out half of net income in the form of a cash dividend. Costs and assets vary with sales, but debt and equity do not. Balance Sheet $26,000 Debt $ 7,000 Equity 19,000 Prepare the pro forma statements. (Input all amounts as positive values. Do not round intermediate calculations and round your answers to the nearest whole dollar amount.) Pro forma income statement External financing needed Assets Total Pro forma balance sheet Debt Equity Total What is the external financing needed? (Do not round intermediate calculations. A negative answer should be indicated by a minus sign.)
Expert Answer:
Answer rating: 100% (QA)
Lets calculate the pro forma statements first 1 Pro Forma Income Statement Given that sales are pred... View the full answer
Related Book For
Fundamentals of Corporate Finance
ISBN: 978-1260153590
12th edition
Authors: Stephen M. Ross, Randolph W Westerfield, Robert R. Dockson, Bradford D Jordan
Posted Date:
Students also viewed these finance questions
-
Saunders Corp. has a book net worth of $15,800. Long-term debt is $3,250. Net working capital, other than cash, is $4,150. Fixed assets are $3,900 and current liabilities are $2,150. Required: (a)How...
-
Assuming a company has an equity multiplier of 2, and flotation cost of equity is 5% and flotation cost for debt 2%. How much would the company need raise to finance a $200,000 project O207,254...
-
Based on the illustration of an iPhone shown below, draw a system model for an iPhone. iPhone Components Flash memory. CPU Main circuit boards Communications GSM cell, WiFi, EDGE Battery Display...
-
Distinguish between gross profit as a percentage of cost and gross profit as a percentage of sales prices. Convert the following gross profit percentages based on cost to gross profit percentages...
-
What is the probability that the hedge fund will need to liquidate for a loss?
-
Explain the difference between ESG reporting and traditional financial reporting.
-
The board of directors of Delta Health Spa authorizes the issuance of $600,000 of 5%, 10-year bonds payable. The semiannual interest dates are May 31 and November 30. The bonds are issued on July 31,...
-
18 years ago, I purchased 185 shares of a stock worth $14.25 per share. There was a 2:1 split, a 4:1 split, and a 3:1 split during that time period. Today the stock is worth $1.53 per share. If the...
-
Ryan Ross (111-11-1112), Oscar Omega (222-22-2222), Clark Carey (333-33-3333), and Kim Kardigan (444-44-4444) are equal active members in ROCK the Ages LLC. ROCK serves as agent and manager for...
-
Determine the minimum resistance R in k of the following circuit to protect the LED from being broken by limiting the operating current below 1mA. Given the total voltage drop of the diode Vp = 0.7V;...
-
Describe the impact that entity-level controls (i.e., control environment, pervasive controls, and general/IT general controls) can have on the effectiveness of purchasing business process controls.
-
Describe Vendor Managed Inventory (VMI), Co-Managed Inventory, Collaborative Forecasting and Replenishment (CFAR), and Collaborative Planning Forecasting and Replenishment (CPFR).
-
How do you create SQL commands in Microsoft Access?
-
a. What kinds of damage are included in the category of environmental hazards? b. What control plans are designed to prevent such hazards from occurring? c. What control plans are designed to limit...
-
What are the principal responsibilities, major duties, and key control concerns of each functional position pictured in Figure 8.4 on page 266 (i.e., the organization chart of an IT organization)?...
-
From which order picking systems might automated storage and retrieval systems (AS/RS) be a part? Select one: a. Pick-and-pass systems b. Parts-to-picker systems c. Parallel pick systems d....
-
Briefly discuss the implications of the financial statement presentation project for the reporting of stockholders equity.
-
Beginning three months from now, you want to be able to withdraw $2,500 each quarter from your bank account to cover college expenses over the next four years. If the account pays .57 percent...
-
Solar Engines manufactures solar engines for tractor-trailers. Given the fuel savings available, new orders for 125 units have been made by customers requesting credit. The variable cost is $6,900...
-
Suppose the current share price for the firm in the previous problem is $54.50 and all the dividend information remains the same. What required return must investors be demanding on the companys...
-
Contrast the assumptions for a finite distributed lag model with those for an infinite distributed lag model.
-
Contrast the exogeneity assumption required for HAC standard errors with that required for estimating an \(\mathrm{AR}(1)\) error model.
-
Test for consistency of least squares in the ARDL representation of an infinite distributed lag model.
Study smarter with the SolutionInn App