Selected assumptions for 2018 Sales growth rate 9 % Cost of goods sold/Sales 62 % Dividends/Net income 40 % Income Statement Balance Sheet Actual Forecast Actual 2017 2018 2017 2018 Sales $ 1,000 Cash $ 100 Cost of goods sold 600 Accounts receivable 200 Operating expense 200 Inventory 500 Depreciation expense 100 Total Current Assets 800 EBIT 100 Net PP&E 1,000 Interest expense 35 Total Assets 1,800 Pre-tax income 65 Accounts payable 300 Tax 26 Bank loan 100 Net Income $39 Total Current Liabilities 400 Long-Term Debt 400 Shareholders' Equity 1,000 Total Liabilities & Equity $ 1,800 Please refer to the spreadsheet above. Selected assumptions are given for preparing pro forma financial statements for 2018. Which of the following formulas would correctly give the forecast for sales in cell C8? Forecast

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Selected assumptions for 2018
Sales growth rate
9 %
Cost of goods sold/Sales 62 %
Dividends/Net income 40 %
Income Statement
Balance Sheet
Actual
Actual
2017 2018
2017
Sales
$ 1,000
Cash
$ 100
Cost of goods sold
600
Accounts receivable
200
Operating expense
200
Inventory
500
Depreciation expense
100
Total Current Assets
800
EBIT
100
Net PP&E
1,000
Interest expense
35
Total Assets
1,800
Pre-tax income
65
Accounts payable
300
Tax
26
Bank loan
100
Net Income
$39
Total Current Liabilities
400
Long-Term Debt
400
Shareholders' Equity
1,000
Total Liabilities & Equity $ 1,800
Please refer to the spreadsheet above. Selected assumptions are given for preparing pro forma
financial statements for 2018. Which of the following formulas would correctly give the forecast
for sales in cell C8?
Forecast
Forecast
2018
Transcribed Image Text:Selected assumptions for 2018 Sales growth rate 9 % Cost of goods sold/Sales 62 % Dividends/Net income 40 % Income Statement Balance Sheet Actual Actual 2017 2018 2017 Sales $ 1,000 Cash $ 100 Cost of goods sold 600 Accounts receivable 200 Operating expense 200 Inventory 500 Depreciation expense 100 Total Current Assets 800 EBIT 100 Net PP&E 1,000 Interest expense 35 Total Assets 1,800 Pre-tax income 65 Accounts payable 300 Tax 26 Bank loan 100 Net Income $39 Total Current Liabilities 400 Long-Term Debt 400 Shareholders' Equity 1,000 Total Liabilities & Equity $ 1,800 Please refer to the spreadsheet above. Selected assumptions are given for preparing pro forma financial statements for 2018. Which of the following formulas would correctly give the forecast for sales in cell C8? Forecast Forecast 2018
=
(1 + B8) x B2
None of the options are correct.
= B8 x B2
= B8 + B8 x B2
(1/B2) × B8
Transcribed Image Text:= (1 + B8) x B2 None of the options are correct. = B8 x B2 = B8 + B8 x B2 (1/B2) × B8
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