Using the data in the student spreadsheet file Ethan Allen Financials.xlsx forecast the June 30, 2019 income statement and balance sheet for Ethan Allen. Use the percent of sales method and the following assumptions: (1) sales in FY 2019 will be $797.3359; (2) the tax rate will be 35%; (3) each item that changes with sales will be the five-year average percentage of sales; (4) net fixed assets will increase to $300; and (5) the common dividend will be $0.75 per share. Use your judgment on all other items.

a. What is the discretionary financing needed in 2019? Is this a surplus or deficit?

b. Assume that the DFN will be absorbed by long-term debt and that the interest rate is 4% of LTD. Set up an iterative worksheet to eliminate it.

INCOME STATEMENT

	Jun '19	Jun '18	Jun '17	Jun '16	Jun '15	Jun '14
Sales	797.336	794.202	754.600	746.659	729.083	729.373
Cost of Goods Sold (COGS) incl. D&A	362.374	351.966	343.437	340.163	330.734	339.085
Gross Income	434.962	442.236	411.163	406.496	398.349	390.288
SG&A Expense	364.184	353.057	345.229	336.860	337.912	340.676
EBIT (Operating Income)	70.778	89.179	65.934	69.636	60.437	49.612
Interest Expense		1.618	5.957	7.540	8.778	9.020
Other Income - Net	0.198	0.395	1.206	0.306	-1.485	0.562
Unusual Expense - Net	0.932	0.000	4.500	0.000	0.000	-0.085
Pretax Income		87.956	56.683	62.402	50.174	41.239
Income Taxes	16.599	31.319	19.541	19.471	17.696	-8.455
Net Income		56.637	37.142	42.931	32.478	49.694
EPS (recurring)		2.00	1.38	1.47	1.11	1.71
EPS (diluted)		2.00	1.27	1.47	1.11	1.71
Diluted Shares Outstanding		28.32	29.18	29.28	29.24	29.11
Total Shares Outstanding		27.75	28.41	28.93	28.91	28.84
Dividends per Share		0.62	0.50	0.40	0.36	0.30
Payout Ratio		31.00	39.37	27.21	32.43	17.54
EBITDA		108.53	85.08	87.57	78.45	68.19
EBIT		89.18	65.93	69.64	60.44	49.61
Depreciation & Amortization Expense		19.35	19.14	17.93	18.01	18.58

BALANCE SHEET

	Jun '19	Jun '18	Jun '17	Jun '16	Jun '15	Jun '14
Assets
Cash Only		52.659	76.182	109.176	72.601	79.721
Total Short Term Investments		0.000	2.198	18.153	15.529	9.005
Short-Term Receivables		9.467	12.547	12.426	12.277	14.919
Inventories		162.323	151.916	146.275	137.256	155.739
Other Current Assets		23.755	27.831	19.599	22.907	23.408
Total Current Assets		248.204	270.674	305.629	260.570	282.792
Property, Plant & Equipment - Gross		598.264	594.912	601.709	594.385	587.368
Accumulated Depreciation		324.649	317.877	313.553	302.713	291.673
Net Property, Plant & Equipment		273.615	277.035	288.156	291.672	295.695
Other Long-Term Assets		55.590	59.599	60.649	65.043	66.301
Total Assets		577.409	607.308	654.434	617.285	644.788
Liabilities & Shareholders' Equity
ST Debt & Curr. Portion LT Debt		3.001	3.341	0.501	0.480	0.250
Accounts Payable		15.437	18.946	24.320	22.995	27.315
Other Current Liabilities		104.909	118.682	111.226	109.464	123.512
Total Current Liabilities		123.347	140.969	136.047	132.939	151.077
Long-Term Debt		38.837	74.227	130.411	130.809	154.250
Other Liabilities		23.023	21.577	20.509	19.180	17.593
Total Liabilities		185.207	236.773	286.967	282.928	322.920
Common Stock Par/Carry Value		0.489	0.489	0.486	0.486	0.485
Additional Paid-In Capital/Capital Surplus		374.972	370.914	365.733	363.938	361.165
Retained Earnings		646.315	607.079	584.395	553.083	542.918
Treasury Stock and Other Deductions from Equity		629.574	607.947	583.147	583.150	582.700
Total Shareholders' Equity		392.202	370.535	367.467	334.357	321.868
Total Liabilities & Shareholders' Equity		577.409	607.308	654.434	617.285	644.788