Make a Proforma Income Statement and ProForma Balance Sheet. Use 15% as the Sales Growth Rate, all other data remain the same.
Make a Proforma Income Statement and ProForma Balance Sheet. Use 15% as the Sales Growth Rate, all other data remain the same.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Make a Proforma Income Statement and ProForma
![Ziegen, Inc.
Income Statement
for 2013
Sales
Net Income
Ziegen, Inc.
Balance Sheet
for 2013
Current assets
Net fixed assets
Total
Accounts payable
Accrued expenses
Notes payable
Current liabilities
Long-term debt
Total liabilities
Common stock (par)
Paid-in capital
Retained earnings
Common equity
Total
$10,000,000
$ 500,000
$ 2,000,000
4,000,000
$6,000,000
$ 1,000,000
1,000,000
500,000
$ 2,500,000
2,000,000
$ 4,500,000
100,000
200,000
1,200,000
$1,500,000
$ 6,000,000
Calculation
$.5m/$10m =
Calculation
$2m/$10m =
$4m/$10m =
$1m/$10m =
$1m/$10m =
Ziegen, Inc.
Pro Forma Income
% of 2013 Sales Statement for 2014
5.0%
% of 2013 Sales
20.0%
40.0%
10.0%
10.0%
NAⓇ
NAⓇ
ΝΑ"
NA"
Calculation
20%
Sales growth rate =
Sales
Net Income
Ziegen, Inc.
Pro Forma Balance
Sheet for 2014
Current assets
Net fixed assets
Total
Accounts payable
Accrued expenses
Notes payable
Current liabilities
Long-term debt
Total liabilities
Common stock (par)
Paid-in capital
Retained earnings
Common equity
Projected sources of financing
Discretionary financing needs (Plug figure)
Total financing needs = Total assets
$10m X (1+20) = $12,000,000
$12m X (.05) =
$ 600,000
Calculation
.20 x 12m =
.40 x 12m =
.10 × 12m =
.10 x 12m =
No change
No change
No change
No change
Calculation
$ 2,400,000
$ 4,800,000
$ 7,200,000
$ 1,200,000
1,200,000
500,000
$ 2,900,000
$ 2,000,000
$ 4,900,000
100,000
200,000
1,500,000
1,800,000
$ 6,700,000
$ 500,000
$ 7,200,000
"Not applicable. These account balances do not vary with sales.
Projected retained earnings for 2014 equals $1,500,000, which is equal to the 2013 level of retained earnings of $1,200,000 plus net income of
$600,000 less common dividends equal to 50% of projected net income, or $300,000.
Discretionary financing needs (DFN) for 2014 is a "plug figure that equals the difference in the firm's projected total financing requirements or total assets
equal to $7,200,000 and projected sources of financing, which is $6,700,000. In this scenario DFN is $500,000.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe704cb26-71bb-4db7-be41-af84a74c6da3%2Ffb6cf88d-4ad3-45fd-8b1f-315e7eb78ef6%2Fvkeq5v6_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Ziegen, Inc.
Income Statement
for 2013
Sales
Net Income
Ziegen, Inc.
Balance Sheet
for 2013
Current assets
Net fixed assets
Total
Accounts payable
Accrued expenses
Notes payable
Current liabilities
Long-term debt
Total liabilities
Common stock (par)
Paid-in capital
Retained earnings
Common equity
Total
$10,000,000
$ 500,000
$ 2,000,000
4,000,000
$6,000,000
$ 1,000,000
1,000,000
500,000
$ 2,500,000
2,000,000
$ 4,500,000
100,000
200,000
1,200,000
$1,500,000
$ 6,000,000
Calculation
$.5m/$10m =
Calculation
$2m/$10m =
$4m/$10m =
$1m/$10m =
$1m/$10m =
Ziegen, Inc.
Pro Forma Income
% of 2013 Sales Statement for 2014
5.0%
% of 2013 Sales
20.0%
40.0%
10.0%
10.0%
NAⓇ
NAⓇ
ΝΑ"
NA"
Calculation
20%
Sales growth rate =
Sales
Net Income
Ziegen, Inc.
Pro Forma Balance
Sheet for 2014
Current assets
Net fixed assets
Total
Accounts payable
Accrued expenses
Notes payable
Current liabilities
Long-term debt
Total liabilities
Common stock (par)
Paid-in capital
Retained earnings
Common equity
Projected sources of financing
Discretionary financing needs (Plug figure)
Total financing needs = Total assets
$10m X (1+20) = $12,000,000
$12m X (.05) =
$ 600,000
Calculation
.20 x 12m =
.40 x 12m =
.10 × 12m =
.10 x 12m =
No change
No change
No change
No change
Calculation
$ 2,400,000
$ 4,800,000
$ 7,200,000
$ 1,200,000
1,200,000
500,000
$ 2,900,000
$ 2,000,000
$ 4,900,000
100,000
200,000
1,500,000
1,800,000
$ 6,700,000
$ 500,000
$ 7,200,000
"Not applicable. These account balances do not vary with sales.
Projected retained earnings for 2014 equals $1,500,000, which is equal to the 2013 level of retained earnings of $1,200,000 plus net income of
$600,000 less common dividends equal to 50% of projected net income, or $300,000.
Discretionary financing needs (DFN) for 2014 is a "plug figure that equals the difference in the firm's projected total financing requirements or total assets
equal to $7,200,000 and projected sources of financing, which is $6,700,000. In this scenario DFN is $500,000.
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