Show the pro forma balance sheet assuming conversion of the


Shaw Products Company, whose present balance sheet is summarized here, is considering issuing $100 million of 6 percent subordinated debentures (par value = $1,000), which are convertible into common stock at a price of $40.

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a. Show the pro forma balance sheet for the issuance of the convertibles prior to conversion. Assume the proceeds are invested in new plant and equipment, and disregard issuance costs.

b. Show the pro forma balance sheet, assuming conversion of the entire issue.

c. How much additional money will the company raise at the time of conversion?

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Financial Management: Show the pro forma balance sheet assuming conversion of the
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