EFM-17problem

# EFM-17problem - 17problem 7:08 Chapter 17 Solution to...

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17problem 3/22/2010 7:08 Chapter 17. Solution to End-of-Chapter Comprehensive/Spreadsheet Prob Problem 17-15: Rework Problems 17-13 and 17-14 Problem 17-13 a. Suppose that in 2006 sales increase by 10% over 2005 sales and that 2006 DPS will increase to \$1.12. Construct the pro forma financial statements using the projected financial statement method. Use AFN to balance the pro forma balance sheet. How much additional capital will be required? Assume the firm operated at full capacity in 2005. Input Data: Tax rate 40% Sales growth 10% Shares outstanding 100,000 Morrissey Technologies Inc.'s 2005 financial statements are shown here. Balance Sheet: 2005 Forecast Basis 2006 Cash \$180,000 \$198,000 Receivables 360,000 396,000 Inventories 720,000 792,000 Total current assets \$1,260,000 \$1,386,000 Fixed assets 1,440,000 1,584,000 Total assets \$2,700,000 \$2,970,000 Accounts payable \$360,000 \$396,000 Notes payable 156,000 156,000 Accrued liabilities 180,000 198,000 Total current liabilities \$696,000 \$750,000 Common stock 1,800,000 1,800,000 Retained earnings 204,000 \$87,217 291,217

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EFM-17problem - 17problem 7:08 Chapter 17 Solution to...

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