Below is an income statement and balance sheet results for 2004 (for a company that began operations in 2003) and need help forecasting for the next year as sales are expected to increase by 50% in 2005--and by 80% in 2006.
Q1. How can i estimate AFN based on percent-of-sales relationships for 2004
Q2. Estimate AFN for 2005
Q3. Prepare pro forma income + balance sheet statements for 2004 before obtaining additional financing. why does the AFN differ from the estimate from question 1?
Q4. Prepare another pro forma if the initial AFN estimate is to be financed by additional long-term funds at 10%
Q5. Prepare pro forma statements for 2005 that build from question 4.
| Income Statement: December 31, 2004 |
| (thousands of dollars) |
|
|
|
|
| sales |
|
$15,000 |
| operating expenses |
-13,000 |
| EBIT |
|
$2,000 |
| interest |
|
-400 |
| EBT |
|
$1,600 |
| taxes (40%) |
|
($640.0) |
| net income |
|
$960 |
| cash dividends (40%) |
-384 |
| added retained earnings |
$576 |
| Balance Sheet: December 31, 2004 |
|
|
|
|
|
|
|
|
|
| cash |
|
$1,000 |
acc. payable |
$1,600 |
| acc. receivable |
2,000 |
bank loan |
|
1,800 |
| inventories |
|
2,200 |
accrued liab. |
1,200 |
|
total current |
$5,200 |
|
total current |
$4,600 |
|
|
|
long-term debt |
2,200 |
| fixed assets |
|
6,800 |
common tock |
2,400 |
|
total assets |
$12,000 |
retained earnings |
2,800 |
|
|
|
|
total liabilites |
$12,000 |