Stevens Textile's 2013 financial statements are shown below:
Balance Sheet as of December 31, 2013 (Thousands of Dollars)
| Cash |
$ 1,080 |
|
Accounts payable |
$ 4,320 |
| Receivables |
6,480 |
|
Accruals |
2,880 |
| Inventories |
9,000 |
|
Line of credit |
0 |
| Total current assets |
$16,560 |
|
Notes payable |
2,100 |
| Net fixed assets |
12,600 |
|
Total current liabilities |
$ 9,300 |
|
|
|
Mortgage bonds |
3,500 |
|
|
|
Common stock |
3,500 |
|
|
|
Retained earnings |
12,860 |
| Total assets |
$29,160 |
|
Total liabilities and equity |
$29,160 |
Income Statement for December 31, 2013 (Thousands of Dollars)
| Sales |
$36,000 |
| Operating costs |
32,440 |
| Earnings before interest and taxes |
$ 3,560 |
| Interest |
460 |
| Pre-tax earnings |
$ 3,100 |
| Taxes (40%) |
1,240 |
| Net income |
$ 1,860 |
| Dividends (45%) |
$ 837 |
| Addition to retained earnings |
$ 1,023 |
Suppose 2014 sales are projected to increase by 25% over 2013 sales. Use the forecasted financial statement method to forecast a balance sheet and income statement for December 31, 2014.
The interest rate on all debt is 6%, and cash earns no interest income. Assume that all additional debt in the form of a line of credit is added at the end of the year, which means that you should base the forecasted interest expense on the balance of debt at the beginning of the year. Use the forecasted income statement to determine the addition to retained earnings.
Assume that the company was operating at full capacity in 2013, that it cannot sell off any of its fixed assets, and that any required financing will be borrowed as notes payable.
Also, assume that assets, spontaneous liabilities, and operating costs are expected to increase by the same percentage as sales.
Determine the additional funds needed. Round your answers to the nearest dollar. Do not round intermediate calculations.
Total assets $
AFN $