6-1 2 FORECASTI N G PRO FORM A FI N AN CIAL STATEM EN TS Prepare a pro forma income
statement and balance sheet for Webb Enterprises, found in Problem 6-7, where rev-
enues are expected to grow by 20% in 2011. Make the following assumptions in making
your forecast of the ﬁrm’s balance sheet for 2011:
■ The income statement expenses are a constant percent of revenues except for inter-
est, which remains equal in dollar amount to the 2010 level, and taxes, which equal
40% of earnings before taxes.
■ The cash and marketable securities balance remains equal to $500,and the remain-
ing current asset accounts and ﬁxed assets increase in proportion to revenues for
■ Net property, plant, and equipment increase in proportion to the increase in rev-
■ Accounts payable increase in proportion to ﬁrm revenues.
■ Owners’ equity increases by the amount of ﬁrm net income for 2011 (no cash divi-
dends are paid).
■ Long-term debt remains unchanged, and short-term debt changes in an amount
that balances the balance sheet.
6-13 FORECASTING FIRM FCF Using your pro forma ﬁnancial statements from Problem
6-12,estimate the ﬁrm’s FCF for 2011.
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