Universal Products Company has almost finished its pro forma financial statements for 2022, as shown next. Universal Products Company Financial Statements, 2021 and Pro Forma 2022 ($ thousands) INCOME STATEMENT Sales Cost of goods sold Operating expense Depreciation expense Interest expense Earnings before tax Tax Net income Current assets Net fixed assets Total assets Current liabilities Long-term debt Owner's equity Total liabilities & equity Actual 2021 $ 6,900 5,400 Net fixed assets in 2022 Owner's equity in 2022 External funding required for 2022 700 250 90 460 161 $ 299 Actual 2021 $3,600 Forecast 2022 Universal Products Company Financial Statements, 2021 and Pro Forma 2022 ($) thousands) BALANCE SHEET 3,000 $6,600 $ 1,130 700 4,770 $ 6,600 $ 7,300 5,500 700 260 80 760 266 $ 494 Forecast 2022 $ 3,850 $ 1,250 500 a. Assume that Universal plans to purchase $600,000 In fixed assets during 2022 and to dispose of no fixed assets during 2022 What would be its forecast for net fixed assets in 2022? b. Assume that Universal plans to have a dividend payout ratio of 50 percent in 2022 and will neither sell nor repurchase equity during 2022. What would be its forecast for owner's equity in 2022? c. Given the assumptions in questions (a) and (b). what is Universal's projected external funding required for 2022?
Universal Products Company has almost finished its pro forma financial statements for 2022, as shown next. Universal Products Company Financial Statements, 2021 and Pro Forma 2022 ($ thousands) INCOME STATEMENT Sales Cost of goods sold Operating expense Depreciation expense Interest expense Earnings before tax Tax Net income Current assets Net fixed assets Total assets Current liabilities Long-term debt Owner's equity Total liabilities & equity Actual 2021 $ 6,900 5,400 Net fixed assets in 2022 Owner's equity in 2022 External funding required for 2022 700 250 90 460 161 $ 299 Actual 2021 $3,600 Forecast 2022 Universal Products Company Financial Statements, 2021 and Pro Forma 2022 ($) thousands) BALANCE SHEET 3,000 $6,600 $ 1,130 700 4,770 $ 6,600 $ 7,300 5,500 700 260 80 760 266 $ 494 Forecast 2022 $ 3,850 $ 1,250 500 a. Assume that Universal plans to purchase $600,000 In fixed assets during 2022 and to dispose of no fixed assets during 2022 What would be its forecast for net fixed assets in 2022? b. Assume that Universal plans to have a dividend payout ratio of 50 percent in 2022 and will neither sell nor repurchase equity during 2022. What would be its forecast for owner's equity in 2022? c. Given the assumptions in questions (a) and (b). what is Universal's projected external funding required for 2022?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Universal Products Company has almost finished its pro forma financial statements for 2022, as shown next.
Universal Products Company
Financial Statements, 2021 and Pro Forma 2022 ($
thousands)
INCOME STATEMENT
Sales
Cost of goods sold
Operating expense
Depreciation expense
Interest expense
Earnings before tax
Tax
Net income
Current assets
Net fixed assets
Total assets
Current liabilities
Long-term debt
Owner's equity
Total liabilities & equity
Actual
2021
$ 6,900
5,400
Net fixed assets in 2022
Owner's equity in 2022
External funding required for 2022
700
250
90
460
161
$ 299
Universal Products Company
Financial Statements, 2021 and Pro Forma 2022 ($)
thousands)
BALANCE SHEET
Actual
2021
$3,600
3,000
$6,600
$ 1,130
Forecast
2022
700
4,770
$ 6,600
$ 7,300
5,500
700
260
80
760
266
$ 494
Forecast
2022
$ 3,850
$ 1,250
500
a. Assume that Universal plans to purchase $600,000 In fixed assets during 2022 and to dispose of no fixed assets during 2022
What would be its forecast for net fixed assets in 2022?
b. Assume that Universal plans to have a dividend payout ratio of 50 percent in 2022 and will neither sell nor repurchase equity
during 2022. What would be its forecast for owner's equity in 2022?
c. Given the assumptions in questions (a) and (b). what is Universal's projected external funding required for 2022?
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