Question Details
(solution) Executive Fruit's financial manager believes that sales in 2015
Executive Fruit?s financial manager believes that sales in 2015 could rise by as much as 20% or by as little as 5%. Assets and costs change in proportion to sales, debt remains constant, and no new equity financing occurs. |
a. | Recalculate the first-stage pro forma financial statements under these two growth assumptions and calculate the required external financing (All figures are in thousands). (Enter your answers in thousands.) |
Base Case | 20% Growth | 5% Growth | ||||
INCOME STATEMENT | ||||||
Revenue | $ | 3,000 | $ | $ | ||
Cost of goods sold | 2,700 | |||||
EBIT | $ | 300 | $ | $ | ||
Interest | 60 | |||||
Earnings before taxes | $ | 240 | $ | $ | ||
State and federal tax | 96 | |||||
Net income | $ | 144 | $ | $ | ||
Dividends | 96 | |||||
Retained earnings | $ | 48 | $ | $ | ||
BALANCE SHEET | ||||||
Assets | ||||||
Net working capital | $ | 300 | $ | $ | ||
Fixed assets | 1,200 | |||||
Total assets | $ | 1,500 | $ | $ | ||
Liabilities and shareholders' equity | ||||||
Long-term debt | $ | 600 | $ | $ | ||
Shareholders' equity | 900 | |||||
Total liabilities and shareholders' equity | $ | 1,500 | $ | $ | ||
Required external financing | $ | $ |
b. | Assume any required external funds will be raised by issuing long-term debt and that any surplus funds will be used to retire such debt. Prepare the completed (second-stage) pro forma balance sheet. (Enter your answers in thousands.) |
BALANCE SHEET | ||||||
Base Case | 20% Growth | 5% Growth | ||||
Assets | ||||||
Net working capital | $ | 300 | $ | $ | ||
Fixed assets | 1,200 | |||||
Total assets | $ | 1,500 | $ | $ | ||
Liabilities and shareholders' equity | ||||||
Long-term debt | $ | 600 | $ | $ | ||
Shareholders' equity | 900 | |||||
Total liabilities and shareholders' equity | $ | 1,500 | $ | $ | ||
20%
Growth Base Case 5%
Growth INCOME
STATEME
NT Revenue $ $3,000.00 $3,600.00 $3,150.00 Cost of
goods
sold $2,700.00 $3,240.00 $2,835.00 EBIT
$ Interest $ 300.00
$ 60.00 $ 360.00
$ 72.00 $...
Solution details:
Answered
QUALITY
Approved
ANSWER RATING
This question was answered on: Sep 13, 2020
PRICE: $15
Solution~00021147784707.docx (25.37 KB)
This attachment is locked

Pay using PayPal (No PayPal account Required) or your credit card . All your purchases are securely protected by .
About this Question
STATUSAnswered
QUALITYApproved
DATE ANSWEREDSep 13, 2020
EXPERTTutor
ANSWER RATING
GET INSTANT HELP/h4>
We have top-notch tutors who can do your essay/homework for you at a reasonable cost and then you can simply use that essay as a template to build your own arguments.
You can also use these solutions:
- As a reference for in-depth understanding of the subject.
- As a source of ideas / reasoning for your own research (if properly referenced)
- For editing and paraphrasing (check your institution's definition of plagiarism and recommended paraphrase).
NEW ASSIGNMENT HELP?
Order New Solution. Quick Turnaround
Click on the button below in order to Order for a New, Original and High-Quality Essay Solutions. New orders are original solutions and precise to your writing instruction requirements. Place a New Order using the button below.
WE GUARANTEE, THAT YOUR PAPER WILL BE WRITTEN FROM SCRATCH AND WITHIN A DEADLINE.
