Using the financial statement data provided, along with the following assumptions, create forecasts for the companys 2021 income statement, balance sheet, statement of cash flows, and selected ratios. Note that the data and an Excel template^* you are encouraged to use are available on Blackboard. Be certain that the forecasted income statement, balance sheet, and statement of cash flow data fully articulate (e.g., the projected change in cash on the cash flow statement equals the projected change in cash shown on the projected balance sheet).

^*If the financial statement data were correctly entered in the template for Homework Assignment 3, the data will not need to be reentered for Homework Assignment 4. If you received feedback after submitting Homework Assignment 3 of required changes to be made on the data entry tab, be certain to incorporate the changes prior to completing the assignment.

Forecast Assumptions

• The growth rate in sales is expected to be 20%.
• Cost of goods sold as a percentage of sales is expected to be 62%.
• Selling, general, and administrative expenses as a percentage of sales is expected to be 32%.
• Depreciation expense is expected to be equal 16% of the end-of-year amount of gross property, plant, and equipment.
• There will be no amortization expenses.
• Interest expense is expected to remain fixed except for increases due to additional debt financing needed to support its growth in operations.
• Other income is expected to remain at the same amount as in the prior year, and no gains or losses from the sale of assets are expected.
• The tax rate is expected to be 25%.
• All operating assets except those referenced below are expected to remain at the same percentage of sales as in the prior year.
• Accounts receivable as a percentage of sales is expected to be 8%.
• New capital expenditures (e.g., new investments in property, plant, and equipment) as a percentage of sales is expected to be 3%. Due to major expansion plans (the primary purpose for looking for new external financing), an additional capital investment of $5,000 is also needed.
• No additional investments in or sales of marketable securities, of other long-term investments, or of leased assets are expected to occur during the year.
• The company expects to maintain a cash account equal to 2% of sales.
• All liabilities (except those referenced below) are expected to remain at the same percentage of sales as in the prior year.
• Accounts payable as a percentage of sales is expected to be 10%.
• Taxes payable, deferred taxes, and operating lease liabilities are expected to remain at the same amounts as in the prior year.
• The company expects to repay the current portion of long-term debt due at the beginning of the year. $3,000 of long-term debt will be reclassified as current liabilities during the year.
• The company will issue new long-term debt of $8,000.
• The company will issue $250 of new common stock during the year with additional shares of common stock issued to generate a net amount of $59.40 per share, the current stock price. There are currently 1,304 shares of common stock outstanding and the number of shares outstanding will increase from issuing new shares (the increased number of shares will equal $250 divided by $59.40 per share). The companys stock price is expected to remain relatively stable during the year with a Wall Street consensus year-stock price estimate of $60 per share.
• The company expects to pay out 30% of its net income during the year as cash dividends.
• The company is not expected to repurchase any of its common stock during the year.
• Any excess cash generated during the year will be invested in new short-term investments earning 1% p.a. and any cash shortages will be financed using new short-term debt (i.e., notes payable) costing 4% p.a. No other financing is expected.

After completing the data entry, please comment on whether the expected changes the financial statements and particularly in the projected financial ratios would be viewed favorably or unfavorably to current and potential creditors of the company, and why.