14.Charming Florist Ltd - Question Cheryl Colby CFO of Charming Florist Ltd has created the firms pro forma balance sheet for the next fiscal year Sales

14.Charming Florist Ltd - Question Cheryl Colby CFO of...

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Question Cheryl Colby, CFO of Charming Florist Ltd., has created the firm’s pro forma balance sheet for the nextfiscal year. Sales are projected to grow by 20 percent to $420 million. Current assets, fixed assets, andshort-term debt are 20 percent, 70 percent, and 10 percent of sales, respectively. Charming Florist paysout 20 percent of its net income in dividends. The company currently has $129 million of long-term debtand $57 million in common stock par value. The profit margin is 14 percent.a.Prepare the current balance sheet for the firm using the projected sales figure.b.Based on Ms. Colby’s sales growth forecast, how much does Charming Florist need in external funds for the upcoming fiscal year?c-1.Prepare the firm’s pro forma balance sheet for the next fiscal year.c-2.Calculate the external funds needed. Solution a.First, we need to calculate the current sales and change in sales. The current sales are next year’s salesdivided by one plus the growth rate, so:Current sales = Next year’s sales / (1 + g)Current sales = $420,000,000 / (1 + .20)
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