FINANCE 5314 - Assignment #3 Individual Assignment Due Thursday 2/17 before class NAME: ___________________________________________ A. Referring to
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FINANCE 5314 - Assignment #3 | |||||||||||||
Individual Assignment | |||||||||||||
Due Thursday 2/17 before class | |||||||||||||
NAME: ___________________________________________ | |||||||||||||
A. Referring to the forecast assumptions in the column labeled A, build the 2022 proforma financial statements and compute EFN in the column labeled A. Assume that there will be no change in ST and LT debt. | |||||||||||||
B. Repeat your forecast, but this time using the assumptions in column B, and building your profomas and compute EFN in the column B-Forecast. Assume no change in ST and LT debt. | |||||||||||||
C. Repeat your forecast, but this time using the assumptions in column C, and building your profomas and compute EFN in the column C-Forecast. Assume no change in ST and LT debt. | |||||||||||||
D. In your A-Forecast, you should have an EFN>0. Briefly describe what this means for the firm, and how the firm might resolve this with ST and LT debt. | |||||||||||||
E. In your C-Forecast you should have an EFN<0. Briefly describe what this means for the firm, and how you might resolve this with ST and LT debt. | |||||||||||||
Forecast Assumptions | A | B | C | Financial Statements | A-Forecast | B-Forecast | C-Forecast | ||||||
2021 | E(2022) | E(2022) | E(2022) | ($-thousands) | 2021 | E(2022) | E(2022) | E(2022) | |||||
Forecast Sales Growth Rate | 25% | 10% | 25% | Sales | 1,607,500 | ||||||||
% of Sales | 87% | 87% | 87% | 87% | COGS | 1,392,500 | |||||||
Gross Profit | 215,000 | 0 | 0 | 0 | |||||||||
% of Sales | 9% | 9% | 9% | 9% | SGA | 145,000 | 0 | ||||||
EBIT | 70,000 | 0 | 0 | 0 | |||||||||
Interest Expense | 24,500 | ||||||||||||
Earnings Before Taxes | 45,500 | 0 | 0 | 0 | |||||||||
Tax Rate | 40% | 40% | 40% | 40% | Taxes | 18,200 | |||||||
Net Income | 27,300 | 0 | 0 | 0 | |||||||||
Dividend % of Net Incomee | 40% | 40% | 40% | 40% | Dividends | 10,920 | |||||||
Reinvestment % of Net Income | 60% | 60% | 60% | 60% | Addition to Retained Earnings | 16,380 | |||||||
2021 | E(2022) | E(2022) | E(2022) | ($-thousands) | 2021 | E(2022) | E(2022) | E(2022) | |||||
Cash Days | 17.6 | 17.6 | 17.6 | 10.0 | Cash | 77,500 | |||||||
Collection Period | 76.3 | 76.3 | 76.3 | 35.0 | Accounts Receivable | 336,000 | |||||||
Inventory Days | 63.3 | 63.3 | 63.3 | 45.0 | Inventory | 241,500 | |||||||
Current Ratio | 2.0 | 2.0 | 2.0 | 2.0 | Total Current Assets | 655,000 | 0 | 0 | 0 | ||||
Fixed Asset Turnover | 5.5 | 5.5 | 5.5 | 5.5 | Net Fixed Assets | 292,500 | |||||||
Total Assets | 947,500 | 0 | 0 | 0 | |||||||||
Days Payables | 33.8 | 40.0 | 40.0 | 40.0 | Accounts Payable | 129,000 | |||||||
Short-term Debt | 84,000 | ||||||||||||
% of Sales | 7.28% | 7.28% | 7.28% | 7.28% | Other Current Liabilities | 117,000 | |||||||
Total Current Liabilities | 330,000 | 0 | 0 | 0 | |||||||||
Liabilities / Assets | 62% | 62% | 62% | 62% | Long-term Debt | 256,500 | |||||||
Common Equity | 361,000 | ||||||||||||
Total Liabilities & Equity | 947,500 | 0 | 0 | 0 | |||||||||
Other: | |||||||||||||
Interest Rate on Debt | 7.2% | 7.2% | 7.2% | 7.2% | External Funds Needed |
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
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