Part B: Financial Planning - Pro Forma Statements 1. Using the financial statements for 2009 as your 'base', assume that Luxio's sales are 20% higher for 2010. Use this projection to prepare the pro forma statements following the requirements listed below. Assume the change in sales is permanent. 2. For the Income Statement: • Cost of Goods Sold rate is expected to remain constant; • 'Depreciation' and 'Interest paid' expenses are expected not to change; • The Tax rate is expected to decrease to 32%; and • Management is expected to increase the amount of dividends paid by 5% (therefore, the Dividend payout rate will increase by 5%). 3. For the Balance Sheet: • 'Current assets' change in direct proportion to sales; • 'Fixed assets' are being operated at 100% of capacity; • 'Accounts payable' changes in direct proportion to sales; . 'Notes payable' and 'Other' current liabilities do not change; • 'Common stock' remains unchanged; and • Use 'Long-term debt' as the plug variable. 4. Determine the amount of External Financing Needed (EFN) under the pro forma assumptions. Detail how this external financing is distributed.
Part B: Financial Planning - Pro Forma Statements 1. Using the financial statements for 2009 as your 'base', assume that Luxio's sales are 20% higher for 2010. Use this projection to prepare the pro forma statements following the requirements listed below. Assume the change in sales is permanent. 2. For the Income Statement: • Cost of Goods Sold rate is expected to remain constant; • 'Depreciation' and 'Interest paid' expenses are expected not to change; • The Tax rate is expected to decrease to 32%; and • Management is expected to increase the amount of dividends paid by 5% (therefore, the Dividend payout rate will increase by 5%). 3. For the Balance Sheet: • 'Current assets' change in direct proportion to sales; • 'Fixed assets' are being operated at 100% of capacity; • 'Accounts payable' changes in direct proportion to sales; . 'Notes payable' and 'Other' current liabilities do not change; • 'Common stock' remains unchanged; and • Use 'Long-term debt' as the plug variable. 4. Determine the amount of External Financing Needed (EFN) under the pro forma assumptions. Detail how this external financing is distributed.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:Part B: Financial Planning - Pro Forma Statements
1. Using the financial statements for 2009 as your 'base', assume that Luxio's
sales are 20% higher for 2010. Use this projection to prepare the pro forma
statements following the requirements listed below. Assume the change in
sales is permanent.
2. For the Income Statement:
• Cost of Goods Sold rate is expected to remain constant;
o 'Depreciation' and 'Interest paid' expenses are expected not to change;
o The Tax rate is expected to decrease to 32%; and
• Management is expected to increase the amount of dividends paid by
5% (therefore, the Dividend payout rate will increase by 5%).
3. For the Balance Sheet:
o 'Current assets' change in direct proportion to sales;
• 'Fixed assets' are being operated at 100% of capacity;
• 'Accounts payable' changes in direct proportion to sales;
o 'Notes payable' and 'Other' current liabilities do not change;
• 'Common stock' remains unchanged; and
• Use 'Long-term debt' as the plug variable.
4. Determine the amount of External Financing Needed (EFN) under the pro
forma assumptions. Detail how this external financing is distributed.
Transcribed Image Text:Sales
Cost of Goods Sold
Depreciation
Earnings Before Interest & Tax
Interest Paid
=Taxable Income
=Taxes (35%)
O Net Income
1
2
3
4
5
6
7
8 LUXIO GOLF CORP.
9 2009 Balance Sheets
0
Dividends
Addition to Retained Earnings
LUXIO GOLF CORP.
2009 Income Statement
1
2 Current Assets
3
4
5 Cash
6 Accounts Receivable
7 Inventory
3 Total Assets
9
0 Fixed Assets
1 Net Plant & Equipment
2
3
4
5 Total Assets
Assets
2008
$ 18,000.00
$ 13,721.95
2009
$ 18,270.00 $ 22,150.00
$ 12,315.00 $ 13,865.00
$ 21,584.00 $ 24,876.00
$ 52,169.00 $ 60,891.00
$168,326.00 $184,735.00
$220,495.00 $245,626.00
$ 285,760.00
$ 205,132.00
$ 21,950.00
$ 58,678.00
$ 9,875.00
$ 48,803.00
$ 17,081.05
$ 31,721.95
Liabilities & Owners Equity
Current Liabilities
Accounts Payable
Notes Payable
Other
Total
Long-term Debt
Owners Equity
Common Stock & paid in
Retained Earnings
Total
Total Liabilities & Owner's
2008
2009
$ 16,215.00 $ 17,318.00
$ 8,000.00 $ 10,000.00
$ 11,145.00 $ 14,451.00
$ 35,360.00 $ 41,769.00
$ 80,000.00 $ 85,000.00
$ 20,000.00 $ 20,000.00
$ 85,135.00 $ 98,857.00
$105,135.00 $118,857.00
$220,495.00 $245,626.00
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