External Funds Needed Cheryl Colby, CFO of Charming Florist Ltd., has created the fi rm's pro forma balance sheet for the next fi scal year. Sales are projected to grow by 15 percent to $253.92 million.
Current assets, fi xed assets, and short-term debt are 20 percent, 90 percent, and 15 percent of sales, respectively. Charming Florist pays out 40 percent of its net income in dividends. The company currently has $32 million of long-term debt, and $16 million in common stock par value. The profi t margin is 10 percent.
a. Construct the current balance sheet for the fi rm using the projected sales fi gure.
b. Based on Ms. Colby's sales growth forecast, how much does Charming Florist need in external funds for the upcoming fi scal year?
c. Construct the fi rm's pro forma balance sheet for the next fi scal year and confi rm the external funds needed that you calculated in part (b).