Financial Statement

 

Executive Fruit’s financial manager believes that sales in 2015 could rise by as much as 20% or by as little as 5%. Assets and costs change in proportion to sales, debt remains constant, and no new equity financing occurs.
 

 

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a. Recalculate the first-stage pro forma financial statements under these two growth assumptions and calculate the required external financing (All figures are in thousands). (Enter your answers in thousands.)

 

 

 

  Base Case      20% Growth        5% Growth
INCOME STATEMENT            
  Revenue $ 3,000   $   $
  Cost of goods sold   2,700        
 


 

 

  EBIT $ 300   $   $
  Interest   60        
 


 

 

  Earnings before taxes $ 240   $   $
  State and federal tax   96
 


 

 

  Net income $ 144   $   $
  Dividends   96        
 


 

 

  Retained earnings $ 48   $   $
 




 


 


             
BALANCE SHEET            
  Assets            
     Net working capital $ 300   $   $
     Fixed assets   1,200        
 


 

 

     Total assets $ 1,500   $   $
 




 


 


  Liabilities and shareholders’ equity            
     Long-term debt $ 600   $   $
     Shareholders’ equity   900        
 


 

 

     Total liabilities and shareholders’ equity $ 1,500   $   $
 




 


 


  Required external financing       $   $

 

 

 

b. Assume any required external funds will be raised by issuing long-term debt and that any surplus funds will be used to retire such debt. Prepare the completed (second-stage) pro forma balance sheet. (Enter your answers in thousands.)

 

 

 

BALANCE SHEET
  Base Case 20% Growth   5% Growth
  Assets            
     Net working capital $ 300   $   $
     Fixed assets   1,200        
 


 

 

     Total assets $ 1,500   $   $
 




 


 


  Liabilities and shareholders’ equity            
     Long-term debt $ 600   $
     Shareholders’ equity   900    
 


 

 

     Total liabilities and shareholders’ equity $ 1,500   $   $