Sales will grow by 10% in 2020. All costs, assets, and current liabilities vary directly with sales. Interest Exp., Common Stock, Tax Rate and Div. payout ratio are constant. L-T Debt=Plug number.

1A. Prepare a 2020 forecast.  What is the 2020 Dividend and Addition to Retained Earnings?

1B. If a bank will allow Atlantic to borrow 2.5 times prior year EBITDA, how much total Long-Term Debt would the bank allow in 2020?

1C. What is Atlantic’s Days Accounts Payables in 2020?  By how many Days would A/P need to increase to balance the Balance Sheet if Long-Term Debt = $70,000?

Income Statement
Year			2019	2020
Net Revenue			140,000
- Cost of Goods Sold			70,000
- Depreciation Expense			9,000
EBIT			61,000
- Interest Expense			10,500
Income Before Taxes			50,500
Tax Expense			10,605
Net Income 2019 Dividend			39,895     9,974
	Balance Sheet
Year (end of)		2019		2020								2019	2020
Assets							Liabilities
Current Assets							Current Liabilities
Cash and Equivalents		10,000					Accounts Payable					21,000
Accounts Receivable		25,000					Long-term Debt					95,000
Inventory		12,000					Total Liabilities					116,000
Fixed Assets, Net		165,000					Stockholders' Equity
Total Assets		212,000					Common Stock					44,000
							Retained Earnings					52,000
							Total Stockholders Equity					96,000

Answer rating: 100% (QA)

Here are the answers to the questions 1A 2020 Net Revenue 140000 11 154000 COGS 7... View the full answer