Sheet1
#1
What we know-Balance sheet as of Dec 31st 2012 shown in millions
Cash
3.50
Accounts payable
9.00
Receivables
26.00
Notes payable
18.00
Inventories
58.00
Accruals
8.50
Total current assets
87.50
Total current liabilities
35.50
Net fixed assets
35.00
Mortgage loan
6.00
Common stock
15.00
Retained earnings
66.00
Total assets
122.50
Total liabilities and equity liabilities
122.50
Sales for 2012 were $350 million and net income for the year was $10.5 million, so the firm’s profit margin was 3%.
They paid dividends of $4.2 million to common stockholders, so its payout ratio was 40%. It tax rate is 40%
and it opened at full capacity. Assume that all assets/sales ratios, spontaneous liabilities/sales ratios, the profit margin,
and the payout ratio remain constant in 2013.
a. If sales are projected to increase by $70 million, or 20%, during 2013, use the AFN
equation to determine their projected external capital requirements.
b. Using the AFN equation determine the self-supporting growth rate. What is the maximum growth rate the firm can
achieve without having to employ nonspontaneous external funds?
c. Use the forecasted financial statement method to forecast their balance sheet for December 2013.
What is the amount of notes payable reported on the 2013forecasted balance sheet?
#2
Balance sheet as of Dec 31st 2012 in thousands
Cash
1080.00
Accounts payable
4320.00
Receivables
6480.00
Accruals
2880.00
Inventories
9000.00
Notes payable
2100.00
Total current assets
16560.00
Total current liabilities
9300.00
Net fixed assets
12600.00
Mortgage bonds
3500.00
Common stock
3500.00
Retained earnings
12860.00
Total assets
29160.00
Total liabilities and equity
29160.00
Income statement for Dec 31 2012 in thousands
Sales
36000.00
Operating costs
32440.00
Earnings before interest and taxes
3560.00
Interest
460.00
Earnings before taxes
3100.00
Taxes (40%)
1240.00
Net…