amonstersmomma
May 20, 2012, 08:40 AM
I am having trouble figuring out where I'm supposed to get the $$ amounts for the pro forma balance sheet for my homework question. I need help with part C. If you can just give me a step by step of how to find the cash I can probably take it from there. I'm just drawing a blank and not finding a good example in the book.
The information given is:
The Landis Corporation had 2008 sales of $100 million. The balance sheet items that vary directly with sales and the profit margin are as follows:
Cash.. . 5%
Accounts receivable.. . 15
Inventory.. . 25
Net fixed assets.. . 40
Accounts payable.. . 15
Accruals.. . 10
Profit margin after taxes.. . 6%
The dividend payout rate is 50 percent of earnings, and the balance in retained earnings at the end of 2008 was $33 million. Common stock and the companys long-term bonds are constant at $10 million and $5 million, respectively. Notes payable are currently $12 million.
A) How much additional external capital will be required for next year if sales increase 15 percent? (Assume that the company is already operating at full capacity.)
RNF= A/S (∆S)- L/S (∆S)-PS_2 (1-D)
RNF= 85% ($15 million)- 25% ($15 million)-(6%)($115 million)(1-50%)
RNF= (0.85)(15)-(0.25) (15)-(0.06)(115)(1-0.50)
RNF= 12.75-3.75-(6.9)(1-0.50)
RNF= 12.75-3.75-(6.9)(0.50)
RNF= 12.75-3.75-3.45
RNF=$5.55 million
C) Prepare a pro forma balance sheet for 2009 assuming that any external funds being acquired will be in the form of notes payable. Disregard the information in part b in answering this question (that is, use the original information and part a in constructing your pro forma balance sheet).
Landis Corporation
Pro Forma Balance sheet
December 31, 2009
Assets
Current assets:
1. Cash ..
2. Accounts receivable ..
3. Inventory ..
4. Net assets .
Total assets
Liabilities and Stockholders Equity:
5. Accounts payable
6. Accruals .
7. Notes payable
8. Long-term bonds .
9. Common stock ..
10. Retained earnings
Total liabilities and stockholders equity
The information given is:
The Landis Corporation had 2008 sales of $100 million. The balance sheet items that vary directly with sales and the profit margin are as follows:
Cash.. . 5%
Accounts receivable.. . 15
Inventory.. . 25
Net fixed assets.. . 40
Accounts payable.. . 15
Accruals.. . 10
Profit margin after taxes.. . 6%
The dividend payout rate is 50 percent of earnings, and the balance in retained earnings at the end of 2008 was $33 million. Common stock and the companys long-term bonds are constant at $10 million and $5 million, respectively. Notes payable are currently $12 million.
A) How much additional external capital will be required for next year if sales increase 15 percent? (Assume that the company is already operating at full capacity.)
RNF= A/S (∆S)- L/S (∆S)-PS_2 (1-D)
RNF= 85% ($15 million)- 25% ($15 million)-(6%)($115 million)(1-50%)
RNF= (0.85)(15)-(0.25) (15)-(0.06)(115)(1-0.50)
RNF= 12.75-3.75-(6.9)(1-0.50)
RNF= 12.75-3.75-(6.9)(0.50)
RNF= 12.75-3.75-3.45
RNF=$5.55 million
C) Prepare a pro forma balance sheet for 2009 assuming that any external funds being acquired will be in the form of notes payable. Disregard the information in part b in answering this question (that is, use the original information and part a in constructing your pro forma balance sheet).
Landis Corporation
Pro Forma Balance sheet
December 31, 2009
Assets
Current assets:
1. Cash ..
2. Accounts receivable ..
3. Inventory ..
4. Net assets .
Total assets
Liabilities and Stockholders Equity:
5. Accounts payable
6. Accruals .
7. Notes payable
8. Long-term bonds .
9. Common stock ..
10. Retained earnings
Total liabilities and stockholders equity