The most recent financial statements for Fleury, Inc., Follows: FLEURY, INC. 2018 Income Statement Sales Rs. 845,000 Costs 657,000 Other expenses…
BBS Fundamentals of Corporate Finance · 2078 · Solved Question with Answer
The most recent financial statements for Fleury, Inc., Follows:
| FLEURY, INC. 2018 Income Statement | |
| Sales | Rs. 845,000 |
| Costs | 657,000 |
| Other expenses | 17,500 |
| Earnings before interest and taxes | Rs. 170,500 |
| Interest paid | 12,500 |
| Taxable income | Rs. 158,000 |
| Taxes (35%) | 55,300 |
| Net income | Rs. 102,700 |
| Dividends | Rs. 30,810 |
| Addition to retained earnings | 71,890 |
Balance Sheet as of December 31, 2018
| Assets | Liabilities and Owners' Equity | ||
| Current assets | Current liabilities | ||
| Cash | Rs. 23,000 | Accounts Payable | Rs. 62,000 |
| Accounts Receivable | 37,000 | Notes payable | 15,000 |
| Inventory | 79,000 | ||
| Total current assets | Rs. 139,000 | Total Current Liabilities | Rs. 77,000 |
| Fixed assets | Long-term debt | 144,000 | |
| New plant and equipment | 375,000 | Owners' equity | |
| Common stock and paid-in surplus | Rs. 100,000 | ||
| Retained earnings | 193,000 | ||
| Total assets | Rs. 514,000 | Total liabilities and owners' equity | Rs. 514,000 |
Sales for 2019 are projected to grow by 20 percent. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales. If the firm is operating at full capacity and no new debt or equity is issued.
a. Based on above information construct the firm's pro forma income statement for next year.
b. Construct the firm's pro forma balance sheet for next year.
c. What external financing is needed to support the 20 percent growth rate in sales?