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FIN 200 Week 3 Assignment Pro Forma Statements

FIN 200 Week 3 Assignment Pro Forma Statements - Sheet1 The...

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Sheet1 Page 1 a. How much additional external capital will be required for next year if sales increase 15 pe Increase in Sales = 100*15%= $15 Million Increase in Asset (based on Sales) = 5%+15%+25%+40%= 85% Increase in Liabilities (based on Sales) = 15%+10%= 25% Need for External Financing = Increase in Asset – Increase in Liabilities – Change in Retained Earnin Need for External Financing = 15*85%-15*25%-115*6%*(1-.50) =5.55 Millions b. What will happen to external fund requirements if Landis Corporation reduces the payout ratio, gro If Landis Corporation reduced payout ratio more earning would be retained and hence need for exter If Landis Corporation grows at a slower rate the need for total additional net asset (Asset less Liabilit If Landis Corporation suffers a decline in its profit margin the retained earning would reduce and hen Balance Sheet Landis Corporation as of December 31 2008 Asset Amount (In Millions) Liabilities Cash 5.75 Account Payable Account Receivable 17.25 Accruals Inventory 28.75 Long Term Bond Net Fixed Asset 46 Notes Payable
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