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 Actual 2021 Forecast $ 5,100 2022 $ 5,500 3,600 4,000 600 500 250 260 70 100 580 640 203 224 $ 377 $ 416 Universal Products Company Financial Statements, 2021 and Pro Forma 2022 ($ thousands) BALANCE SHEET Current assets Net fixed assets Total assets Long-term debt Current liabilities Owner's equity Total liabilities & equity Actual 2021 $ 3,000 2,000 $ 5,000 $ 1,070 600 3,330 $ 5,000 Forecast 2022 $ 3,250 $ 1,190 500 a. Assume that Universal plans to purchase $400,000 in fixed assets during 2022 and to dispose of no fixed assets during 2022. What would be its forecast for net fixed assets in 2022? b. Assume that Universal plans to have a dividend payout ratio of 50 percent in 2022 and will neither sell nor repurchase equity during 2022. What would be its forecast for owner's equity in 2022? c. Given the assumptions in questions (a) and (b), what is Universal's projected external funding required for 2022? Net fixed assets in 2022 Owner's equity in 2022 External funding required for 2022
Universal Products Company has almost finished its pro forma financial statements for 2022, as shown next. Universal Products Company Financial Statements, 2021 and Pro Forma 2022 ($ thousands) INCOME STATEMENT Sales Cost of goods sold Operating expense Depreciation expense Interest expense Earnings before tax Tax Net income Actual 2021 Forecast $ 5,100 2022 $ 5,500 3,600 4,000 600 500 250 260 70 100 580 640 203 224 $ 377 $ 416 Universal Products Company Financial Statements, 2021 and Pro Forma 2022 ($ thousands) BALANCE SHEET Current assets Net fixed assets Total assets Long-term debt Current liabilities Owner's equity Total liabilities & equity Actual 2021 $ 3,000 2,000 $ 5,000 $ 1,070 600 3,330 $ 5,000 Forecast 2022 $ 3,250 $ 1,190 500 a. Assume that Universal plans to purchase $400,000 in fixed assets during 2022 and to dispose of no fixed assets during 2022. What would be its forecast for net fixed assets in 2022? b. Assume that Universal plans to have a dividend payout ratio of 50 percent in 2022 and will neither sell nor repurchase equity during 2022. What would be its forecast for owner's equity in 2022? c. Given the assumptions in questions (a) and (b), what is Universal's projected external funding required for 2022? Net fixed assets in 2022 Owner's equity in 2022 External funding required for 2022
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Universal Products Company has almost finished its pro forma financial statements for 2022, as shown next.
Universal Products Company
Financial Statements, 2021 and Pro Forma 2022 ($
thousands)
INCOME STATEMENT
Sales
Cost of goods sold
Operating expense
Depreciation expense
Interest expense
Earnings before tax
Tax
Net income
Actual
2021
Forecast
$ 5,100
2022
$ 5,500
3,600
4,000
600
500
250
260
70
100
580
640
203
224
$ 377
$ 416
Universal Products Company
Financial Statements, 2021 and Pro Forma 2022 ($
thousands)
BALANCE SHEET
Current assets
Net fixed assets
Total assets
Long-term debt
Current liabilities
Owner's equity
Total liabilities & equity
Actual
2021
$ 3,000
2,000
$ 5,000
$ 1,070
600
3,330
$ 5,000
Forecast
2022
$ 3,250
$ 1,190
500
Transcribed Image Text:a. Assume that Universal plans to purchase $400,000 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?
Net fixed assets in 2022
Owner's equity in 2022
External funding required for 2022
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