Stevens Textile's 2016 financial statements are shown below:
Balance Sheet as of December 31, 2016 (Thousands of Dollars)
|Cash||$ 1,080||Accounts payable||$ 4,320|
|Inventories||9,000||Line of credit||0|
|Total current assets||$16,560||Notes payable||2,100|
|Net fixed assets||12,600||Total current liabilities||$ 9,300|
|Total assets||$29,160||Total liabilities and equity||$29,160|
Income Statement for December 31, 2016 (Thousands of Dollars)
|Earnings before interest and taxes||$ 3,560|
|Pre-tax earnings||$ 3,100|
|Net income||$ 1,860|
|Dividends (45%)||$ 837|
|Addition to retained earnings||$ 1,023|
- Suppose 2017 sales are projected to increase by 10% over 2016 sales. Use the forecasted financial statement method to forecast a balance sheet and income statement for December 31, 2017. The interest rate on all debt is 6%, and cash earns no interest income. Assume that all additional debt in the form of a line of credit is added at the end of the year, which means that you should base the forecasted interest expense on the balance of debt at the beginning of the year. Use the forecasted income statement to determine the addition to retained earnings. Assume that the company was operating at full capacity in 2016, that it cannot sell off any of its fixed assets, and that any required financing will be borrowed as notes payable. Also, assume that assets, spontaneous liabilities, and operating costs are expected to increase by the same percentage as sales. Determine the additional funds needed. Round your answers to the nearest dollar. Do not round intermediate calculations.
Total assets $ AFN $
- What is the resulting total forecasted amount of the line of credit? Round your answer to the nearest dollar. Do not round intermediate calculations.Line of credit $
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