Garlington Technologies Inc.'s 2019 financial statements are shown below: Income Statement for December 31, 2019 Sales $4,000,000 Operating costs 3,200,000 EBIT $ 800,000 Interest 120,000 Pre-tax earnings $ 680,000 Taxes (25%) 170,000 Net income 510,000 Dividends $ 190,000
Financing Deficit
Garlington Technologies Inc.'s 2019 financial statements are shown below:
Income Statement for December 31, 2019
| Sales | $4,000,000 |
| Operating costs | 3,200,000 |
| EBIT | $ 800,000 |
| Interest | 120,000 |
| Pre-tax earnings | $ 680,000 |
| Taxes (25%) | 170,000 |
| Net income | 510,000 |
| Dividends | $ 190,000 |
| Cash | $ 160,000 | Accounts payable | $ 360,000 | |
| Receivables | 360,000 | Line of credit | 0 | |
| Inventories | 720,000 | Accruals | 200,000 | |
| Total CA | $1,240,000 | Total CL | $ 560,000 | |
| Fixed assets | 4,000,000 | Long-term bonds | 1,000,000 | |
| Total Assets | $5,240,000 | Common stock | 1,100,000 | |
| RE | 2,580,000 | |||
| Total L&E | $5,240,000 |
Suppose that in 2020 sales increase to $4.8 million and that 2020 dividends will increase to $234,000.
| Garlington Technologies Inc. Pro Forma Income Statement December 31, 2020 |
||
| Sales | $ | |
| Operating costs | $ | |
| EBIT | $ | |
| Interest | $ | |
| Pre-tax earnings | $ | |
| Taxes (25%) | $ | |
| Net income | $ | |
| Dividends: | $ | |
| Addition to RE: | $ |
| Garlington Technologies Inc. Pro Forma Balance Statement December 31, 2020 |
||
| Cash | $ | |
| Receivables | $ | |
| Inventories | $ | |
| Total current assets | $ | |
| Fixed assets | $ | |
| Total assets | $ | |
| Accounts payable | $ | |
| Line of credit | $ | |
| Accruals | $ | |
| Total current liabilities | $ | |
| LT bonds | $ | |
| Common stock | $ | |
| $ | ||
| Total L&E | $ |
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