Practice1 INPUT DATA Forecasted annual sales growth 10% COGS/SALES 55% SG&A/SALES 20% DEPRECIATION/Gross PPE 8% INTEREST RATE 10% TAX

Practice1

INPUT DATA
Forecasted annual sales growth 10%
COGS/SALES 55%
SG&A/SALES 20%
DEPRECIATION/Gross PPE 8%
INTEREST RATE 10%
TAX RATE 35%
CASH/SALES Plug
ACCOUNT RECEIVABLE/SALES 35%
INVENTORY/SALES 85%
ACCOUNTS PAYABLE/SALES 14%
OTHER CURRENT LIAB/SALES 25%
GROSS PPE 70% of sales if Sales <=45000
27000+0.7(Sales-40000) if 45000< Sales <= 50000
38500+0.3(Sales-50000) if Sales > 50000
No change in dividend
No change in long-term debt and stock
SHORT-TERM BORROWING No change
2001 2002 2003 2004 2005 2006
INCOME STATEMENT
Sales 39,792 43,771 48,148 52,963 58,259 64,085
Cost of goods sold (22,335) (24,074) (26,482) (29,130) (32,043) (35,247)
Selling, general, & admin. expenses (7,970) (8,754) (9,630) (10,593) (11,652) (12,817)
Depreciation (2,667) (2,292) (2,534) (2,884) (3,215) (3,348)
Operating income 6,820 8,651 9,503 10,357 11,350 12,673
Interest expense (3,200) (3,580) (3,580) (3,580) (3,580) (3,580)
Earnings before taxes 3,620 5,070 5,923 6,777 7,770 9,093
Income taxes (1,267) (1,775) (2,073) (2,372) (2,719) (3,183)
Net Earnings 2,353 3,296 3,850 4,405 5,050 5,910
Dividends 1,500 1,500 1,500 1,500 1,500 1,500
Retentions of Earnings 853 1,796 2,350 2,905 3,550 4,410
BALANCE SHEET
Assets
Cash 1,540 (817) (1,543) (6,340) (5,453) (4,161)
Accounts Receivable 13,316 15,320 16,852 18,537 20,391 22,430
Inventories 34,717 37,206 40,926 45,019 49,521 54,473
Total Current Assets 49,573 51,708 56,235 57,216 64,458 72,741
Gross Property Plant & Equipt. 26,667 30,640 32,704 39,389 40,978 42,726
Accumulated Depreciation (10,205) (12,497) (15,031) (17,915) (21,130) (24,478)
Net Property Plant & Equipt. 16,462 18,142 17,673 21,474 19,848 18,248
Total Assets 66,035 69,850 73,908 78,690 84,306 90,989
Liabilities and Stockholders’ Equity
Short Term Borrowings 25,802 25,802 25,802 25,802 25,802 25,802
Accounts Payable 5,328 6,128 6,741 7,415 8,156 8,972
Other Current Liabilities 9,723 10,943 12,037 13,241 14,565 16,021
Total Current Liabilities 40,853 42,873 44,580 46,458 48,523 50,795
Long Term Debt 10,000 10,000 10,000 10,000 10,000 10,000
Total Liabilities 50,853 52,873 54,580 56,458 58,523 60,795
Stock 10,000 10,000 10,000 10,000 10,000 10,000
Retained earnings 5,182 6,978 9,328 12,233 15,783 20,194
Stockholders’ Equity 15,182 16,978 19,328 22,233 25,783 30,194
Total Liabs. & Stkhldrs’ Eq. 66,035 69,850 73,908 78,690 84,306 90,989

Practice2

INPUT DATA
Forecasted annual sales growth 10% You find that the Cash account balance drops below zero in some years in the first question.
COGS/SALES 55% In this question, build the the pro forma assuming that if the cash balance should be at least 2000. If needed, borrow short-term debt to make up the shortfall.
SG&A/SALES 20%
DEPRECIATION/Gross PPE 8%
INTEREST RATE 10%
TAX RATE 35%
CASH/SALES Plug
ACCOUNT RECEIVABLE/SALES 35%
INVENTORY/SALES 85%
ACCOUNTS PAYABLE/SALES 14%
OTHER CURRENT LIAB/SALES 25%
GROSS PPE 70% of sales if Sales <=45000
27000+0.7(Sales-40000) if 45000< Sales <= 50000
38500+0.3(Sales-50000) if Sales > 50000
No change in dividend
No change in long-term debt and stock
SHORT-TERM BORROWING Plug
2001 2002 2003 2004 2005 2006
INCOME STATEMENT
Sales 39,792 43,771 48,148 52,963 58,259 64,085
Cost of goods sold (22,335) (24,074) (26,482) (29,130) (32,043) (35,247)
Selling, general, & admin. expenses (7,970) (8,754) (9,630) (10,593) (11,652) (12,817)
Depreciation (2,667) (2,292) (2,534) (2,884) (3,215) (3,348)
Operating income 6,820 8,651 9,503 10,357 11,350 12,673
Interest expense (3,200) (3,726) (3,919) (4,227) (4,488) (4,488)
Earnings before taxes 3,620 4,925 5,585 6,130 6,863 8,186
Income taxes (1,267) (1,724) (1,955) (2,146) (2,402) (2,865)
Net Earnings 2,353 3,201 3,630 3,985 4,461 5,321
Dividends 1,500 1,500 1,500 1,500 1,500 1,500
Retentions of Earnings 853 1,701 2,130 2,485 2,961 3,821
BALANCE SHEET
Assets
Cash 1,540 2,000 2,000 2,000 2,296 2,998
Accounts Receivable 13,316 15,320 16,852 18,537 20,391 22,430
Inventories 34,717 37,206 40,926 45,019 49,521 54,473
Total Current Assets 49,573 54,525 59,778 65,556 72,208 79,901
Gross Property Plant & Equipt. 26,667 30,640 32,704 39,389 40,978 42,726
Accumulated Depreciation (10,205) (12,497) (15,031) (17,915) (21,130) (24,478)
Net Property Plant & Equipt. 16,462 18,142 17,673 21,474 19,848 18,248
Total Assets 66,035 72,668 77,451 87,030 92,056 98,149
Liabilities and Stockholders’ Equity
Short Term Borrowings 25,802 28,714 29,660 34,877 34,877 34,877
Accounts Payable 5,328 6,128 6,741 7,415 8,156 8,972
Other Current Liabilities 9,723 10,943 12,037 13,241 14,565 16,021
Total Current Liabilities 40,853 45,785 48,438 55,532 57,598 59,870
Long Term Debt 10,000 10,000 10,000 10,000 10,000 10,000
Total Liabilities 50,853 55,785 58,438 65,532 67,598 69,870
Stock 10,000 10,000 10,000 10,000 10,000 10,000
Retained earnings 5,182 6,883 9,013 11,498 14,458 18,279
Stockholders’ Equity 15,182 16,883 19,013 21,498 24,458 28,279
Total Liabs. & Stkhldrs’ Eq. 66,035 72,668 77,451 87,030 92,056 98,149

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