Project income statement and balance sheet for 2020 using 3.33A and 3.3B

  

 Use a sales growth rate of 20% for 2020 and draw the Projected balance sheet and income statement for 2020. All other assumptions are the same 

In addition to drawing the proforma statement for 2020, answer the following:

1. Why does the firm need money in 2020?

2. How much does the firm need in 2020?

3. What the are main risks to a bank lending money to PIPES?

4. Will a bank lend money to PIPES?

5. What are the risks to the bank if it decides to lend money to PIPES
 
 

Transcribed Image Text:

TABLE 3:3A PIPES-Pro Forma Income Statements 2017 to 2019 ($000s) 2017 2018 2019 Sales 2,750 3,438 4,297 Cost of goods sold 2,075 2,594 3,243 Gross profit 675 844 1,054 426 533 666 249 311 388 4.7 50 56 202 261 332 116 216 Operating expenses Earnings before interest and tax Interest expense Profit before tax Income tax Net earnings 71 131 91 170 TABLE 3:3A PIPES-Pro Forma Income Statements 2017 to 2019 ($000s) 2017 2018 2019 Sales 2,750 3,438 4,297 Cost of goods sold 2,075 2,594 3,243 Gross profit 675 844 1,054 426 533 666 249 311 388 4.7 50 56 202 261 332 116 216 Operating expenses Earnings before interest and tax Interest expense Profit before tax Income tax Net earnings 71 131 91 170

Answer rating: 100% (QA)

SOLUTION To project the pro forma income statement and balance sheet for 2020 we first need to calculate the expected values of the various accounts based on the given assumptions Using a sales growth ... View the full answer