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