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With the partial model please forecast Ziebers 2017 income statement and balance sheets. Use the following assumptions: (1) Sales grow by 6%. (2) The ratios of expenses to sales, depreciation to fixed assets, cash to sales, accounts receivable to sales, and inventories to sales will be the same in 2017 as in 2016. (3) Zieber will not issue any new stock or new long-term bonds. (4) The interest rate is 11% for long- term debt and the interest expense on long-term debt is based on the average balance during the year. (5) No interest is earned on cash. (6) Regular dividends grow at an 8% rate. Calculate the additional funds needed (AFN). If new financing is required, assume it will be raised by drawing on a line of credit with an interest rate of 12%. Assume that any draw on the line of credit will be made on the last day of the year, so there will be no additional interest expense for the new line of credit. If surplus funds are available, pay a special dividend.

• What are the forecasted levels of the line of credit and special dividends? (Hints: Create a column showing the ratios for the current year; then create a new column showing the ratios used in the forecast. Also, create a preliminary forecast that doesnt include any new line of credit or special dividends. Identify the financing deficit or surplus in this preliminary forecast and then add a new column that shows the final forecast that includes any new line of credit or special dividend.)
• Now assume that the growth in sales is only 3%. What are the forecasted levels of the line of credit and special dividends?

= . Cla Assignment 5(1) - Microsoft Excel Home Insert Page Layout Formulas Data Review View X % Cut AutoSum Arial 10 Wrap Text General ECopy Fill - Paste BIU *Merge & Center % 4.0 .00 .00 0 Insert Delete Format Format Painter Conditional Format Cell Formatting as Table Styles Styles 2 Clear Sort & Find & Filter - Select Editing Clipboard Font Alignment Number Cells J42 fic A B C D E F G. . J K L M N 0 P 1 2 Start with the partial model in the file Ch12 P10 Build a Moderxdsx on the textbook's Web site, which contains the 4 2016 financial statements of Zieber Corporation. Forecast Zeiber's 2017 income statement and balance sheets. 5 Use the following assumptions: (1) Sales grow by 6%. (2) The ratios of expenses to sales, depreciation to fixed 6 assets, cash to sales, accounts receivable to sales, and inventories to sales will be the same in 2017 as in 2016. 7 (3) Zeiber will not issue any new stock or new long-term bonds. (4) The interest rate is 11% for long-term debt and 8 the interest expense on long-term debt is based on the average balance during the year. (5) No interest is earned 9 on cash. (6) Regular dividends grow at an 8% rate. (6) Calculate the additional funds needed (AFN). If new financing 10 is required, assume it will be raised by drawing on a line of credit with an interest rate of 12%. Assume that any 11 draw on the line of credit will be made on the last day of the year, so there will be no additional interest expense for 12 the new line of credit. If surplus funds are available, pay a special dividend. 13 14 Key Input Data: Used in the 15 forecast 16 Tax rate 40% 17 Dividend growth rate 8% 18 Rate on notes payable-term debt, rata 9% 19 Rate on long-term debt, ra 11% 20 Rate on line of credit, loc 12% 21 22 a. What are the forecasted levels of the line of credit and special dividends? (Hints: Create a column showing the 23 ratios for the current year; then create a new column showing the ratios used in the forecast. Also, create a 24 preliminary forecast that doesn't include any new line of credit or special dividends. Identify the financing deficit or 25 surplus in this preliminary forecast and then add a new column that shows the final forecast that includes any new 26 line of credit or special dividend.) 27 28 Begin by calculating the appropriate historical ratios in Column E. Then put these ratios and any other input ratios in 29 Column G. 30 31 Forecast the preliminary balance sheets and income statements in Column H. Don't include any line of credit or 32 special dividend in the preliminary forecast. 33 KAssignment 6 Ready BOW 90% - U - 34 After completing the preliminary forecast of the balance sheets and income statement, go to the area below the 35 preliminary forecast and identify the financing deficit or surplus. Then use Excel's IF statements to specify the 36 amount of any new line of credit OR special dividend you should not have a new line of credit AND a special 37 dividend, only one or the other). 38 39 After specifying the amounts of the special dividend or line of credit, create second column for the final 40 forecast next to the column for the preliminary forecast (H). In this final forecast, be sure to include the effect of the 41 special dividend or line of credit. 42 43 44 Income Statements: 2017 Preliminary 45 (December 31, in thousands of dollars) 2016 forecast (doesn't 2017 Final forecast 46 Historical 2017 Input include special (includes special 47 2016 ratios Forecasting basis ratios dividend or LOC) dividend or LOC) 48 Sales $455,150 Growth 49 Expenses (excluding depr. amort.) $386,878 % of sales 50 Depreciation and Amortization $14,565 % of fixed assets 51 EBIT $53,708 52 Interest expense on long-term debt $11,880 Interest rate x average debt during year 53 Interest expense on line of credit $0 $41,828 55 Taxes (40%) $16,731 56 Net Income $25,097 57 5/ 58 Common dividends (regular dividends) $12,554 Growth 59 Special dividends Zero in preliminary forecast 60 Addition to retained earnings $12,543 54 EBT 2016 Historical ratios 2017 Preliminary forecast (doesn't 2017 Final forecast 2017 Input include special (includes special ratios dividend or LOC) dividend or LOC) 2016 Forecasting basis % of sales % of sales % of sales $18,206 $100,133 $45,515 $163,854 $182,060 $345,914 % of sales 62 Balance Sheets 63 (December 31, in thousands of dollars) 64 65 66 Assets: 67 Cash 68 Accounts Receivable 69 Inventories 70 Total current assets 71 Fixed assets 72 Total assets 73 74 Liabilities and equity 75 Accounts payable 76 Accruals 77 Line of credit 78 Total current liabilities 79 Long-term debt 80 Total liabilities 81 Common stock 82 Retained Earnings 83 Total common equity 84 Total liabilities and equity $31,861 % of sales $27,309 % of sales $0 Zero in preliminary forecast $59,170 $120,000 Previous $179,170 $60,000 Previous $106,745 Previous + Addition to retained earnings $166,745 $345,914 Identify Financing Deficit or Surplus Increase in spontaneous liabilities (accounts payable and accruals) + Increase in long-term bonds, preferred stock and common stock + Net income (in preliminary forecast) minus regular common dividends Increase in financing Increase in total assets Amount of financing deficit or surplus: If deficit in financing (negative), show the amount for the line of credit If surplus in financing (positive), show the amount of the special dividend a. What are the forecasted levels of the line of credit and special dividends? Required ine of credit Special dividends Note: We copied values from H99:H100 when sales growth in G51 = 6%. b. Now assume that the growth in sales is only 3% (do this by changing the growth rate in Cell G51). What are the forecasted levels of line of credit and special dividends? Required ine of credit Special dividends Note: We copied values from H99:H100 when sales growth in G51 = 3%