Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN: 9781337395083
Author: Eugene F. Brigham, Phillip R. Daves
Publisher: Cengage Learning
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Chapter 9, Problem 9P
a)
Summary Introduction
To determine: Projected financial statement of the company for 2019.
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Pro forma balance sheet Peabody & Peabody has 2019 sales of $10 million. It wishes to analyze expected performance and financing needs for 2021, which is 2 years ahead. Given the following information, respond to parts a and b.
(1) The percent of sales for items that vary directly with sales are as follows: Accounts receivable, 12% Inventory, 18% Accounts payable, 14% Net profit margin, 3%
(2) Marketable securities and other current liabilities are expected to remain unchanged.
(3) A minimum cash balance of $480,000 is desired.
(4) A new machine costing $650,000 will be acquired in 2020, and equipment costing $850,000 will be purchased in 2021. Total depreciation in 2020 is forecast as $290,000, and in 2021 $390,000 of depreciation will be taken.
(5) Accruals are expected to rise to $500,000 by the end of 2021.
(6) No sale or retirement of long-term debt is expected.
(7) No sale or repurchase of common stock is expected.
(8) The dividend payout of 50% of net profits is expected to…
Pro forma balance sheet Peabody & Peabody has
2019
sales of
$10.5
million. It wishes to analyze expected performance and financing needs for
2021—2
years ahead. Given the following information, respond to parts a. and b.
(1) The percents of sales for items that vary directly with sales are as follows: Accounts receivable;
11.9%,
Inventory;
17.7%;
Accounts payable,
13.6%;
Net profit margin,
3.5%.
(2) Marketable securities and other current liabilities are expected to remain unchanged.
(3) A minimum cash balance of
$482,000
is desired.
(4) A new machine costing
$653,000
will be acquired in
2020,
and equipment costing
$848,000
will be purchased in
2021.
Total depreciation in
2020
is forecast as
$288,000,
and in
2021
$388,000
of depreciation will be taken.
(5) Accruals are expected to rise to
$504,000
by the end of
2021.
(6) No sale or retirement of long-term debt is expected.
(7) No sale or repurchase of common stock is expected.
(8) The dividend payout of…
Long-Term Financing Needed
At year-end 2018, Wallace Landscaping's total assets were $2.37 million, and its accounts payable were $360,000. Sales, which in 2018 were $2.1 million, are expected to increase by 10% in 2019. Total assets and accounts payable
are proportional to sales, and that relationship will be maintained. Wallace typically uses no current liabilities other than accounts payable. Common stock amounted to $640,000 in 2018, and retained earnings were $345,000.
Wallace has arranged to sell $90,000 of new common stock in 2019 to meet some of its financing needs. The remainder of its financing needs will be met by issuing new long-term debt the end of 2019. (Because the debt is
added at the end of the year, there will be no additional interest expense due to the new debt.) Its net profit margin on sales is 5%, and 45% of earnings will be paid out as dividends.
a. What was Wallace's total long-term debt in 2018? Do not round intermediate calculations. Round your answer to the…
Chapter 9 Solutions
Intermediate Financial Management (MindTap Course List)
Ch. 9 - Define each of the following terms:
Operating...Ch. 9 - Prob. 2QCh. 9 - Prob. 3QCh. 9 - Prob. 4QCh. 9 - Prob. 5QCh. 9 - Prob. 6QCh. 9 - Broussard Skateboard’s sales are expected to...Ch. 9 - AFN Equation Refer to Problem 9-1. What would be...Ch. 9 - AFN Equation Refer to Problem 9-1. Return to the...Ch. 9 - Sales Increase Maggies Muffins Bakery generated 5...
Ch. 9 - Long-Term Financing Needed At year-end 2018,...Ch. 9 - Additional Funds Needed
The Booth Company’s sales...Ch. 9 - Forecasted Statements and Ratios Upton Computers...Ch. 9 - Financing Deficit
Stevens Textile Corporation’s...Ch. 9 - Prob. 9PCh. 9 - Hatfield Medical Supplys stock price had been...Ch. 9 - Prob. 2MCCh. 9 - Define the term capital intensity. Explain how a...
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