Financial Planning and Forecasting4

Financial Planning and Forecasting4 - YOU ARE GIVEN THE...

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Old Exam Questions - Financial Planning and Forecasting Page 19 of 35 Pages YOU ARE GIVEN THE FOLLOWING INFORMATION FOR QUESTIONS 19 - 20: Income Statement (In Millions) 2004 2005 w/o 2005 w/ Sales (all on credit; 360-day year) 4,500.00 Operating costs -3,825.00 EBITDA 675.00 Depreciation and amortization -120.00 Earnings before interest and taxes 555.00 Interest (10%) -123.34 Earnings before taxes 431.66 Taxes (40%) -172.66 Net income 259.00 Common dividends 225.00 Balance Sheet (In Millions) 2004 2005 w/o 2005 w/ Assets: Cash 450.00 Accounts receivable 375.00 Inventories 675.00 Total current assets 1,500.00 Net plant and equipment 1,080.00 Total assets 2,580.00 Liabilities and equity: Accounts payable 562.50 Notes payable 783.40 Accruals 225.00 Total current liabilities 1,570.90 Long-term bonds 450.00 Total debt 2,020.90 Common stock (50 million shares) 400.00 Retained earnings 159.10 Total common equity 559.10 Total liabilities and equity 2,580.00 AFN 19. Now make the following assumptions: Operating costs, current assets, accounts payable, and accruals will all increase proportionately with sales. Sales are expected to increase to $5,000 in 2005 The firm expects to add $200 to fixed assets. This increase will be depreciated on a straight-line basis over 10 years. All other fixed assets will continue to be depreciated at $120 per year.
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Old Exam Questions - Financial Planning and Forecasting Page 20 of 35 Pages The firm expects to pay off all of its notes payable at the beginning of 2005. Long-term debt will continue to have an interest rate of 10 percent. The firm plans to increase its total dividend to $250 in 2005. Now, without considering how it is to be funded, do a first pass and determine the additional funds needed. A. $794.28 B. $872.33 C. $833.57 D. $955.91 E. $904.45 20. Now assume that the firm plans to raise all of its additional funds needed as equity, but that it will maintain dividends at $250. Do a second pass and determine the new level of additional funds needed. A. $ 0.00 B. $100.00 C. $ 25.00 D. $ 75.00 E. $ 50.00 21. You are given below the 2005 year-end financial statements for your firm (in thousands) and have been asked to project the firm’s funding needs for 2006. You may make the
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This note was uploaded on 07/13/2011 for the course FIN 4414 taught by Professor Staff during the Spring '08 term at University of Florida.

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Financial Planning and Forecasting4 - YOU ARE GIVEN THE...

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