Consider the Industrial Supply Company example (Table 4.4) again. Assume that the company plans to maintain its dividend payments at the same level in 2007 as in 2006. Also assume that all of the additional financing needed is in the form of short-term notes payable.
Determine the amount of additional financing needed and pro forma financial statements (that is, balance sheet, income statement, and selected financial ratios) for 2007 under each of the following conditions:
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Increase in sales
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Increase in Expenses
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a.
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$3,750,000
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$3,750,000
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b.
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$3,000,000
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$2,800,000
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c.
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$4,500,000
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$4,000,000
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