FIN 630 Chapter 4 Problem
Complete the following income statement for GRISWOLD, Inc. The company is in the 33% tax bracket and they have $48,000 in assets being depreciated straight line over four years.
2016 INCOME STATEMENT 12/31/16 BALANCE SHEET
SALES $79,000 ASSETS DEBT & LIAB
COGS $42,100 Current Assets $12,000 Current Liab $9,200
S&A Expenses $ 8,000 Fixed Assets $115,000 L-term Debt $98,000
Depreciation $______ Equity $19,800
Interest $ 3,000 Total Assets $127,000 Debt & Liab $127,000
Next year, sales are expected to increase to $88,000. Assets (both current and fixed) and COGS are proportional to sales. Debt and equity are not. A dividend payout ratio of 60% is employed. The tax rate remains at 33% and depreciation will stay the same as calculated for 2016 above.
Complete the proforma income statement and balance sheet below.
PROFORMA INCOME STATEMENT PROFORMA BALANCE SHEET
SALES $88,000 ASSETS DEBT & LIAB
COGS $ Current Assets $ Current Liab $
S&A Expenses $ 8,000 Fixed Assets $ L-term Debt $
Depreciation $______ Equity $
Interest $ 3,000 Total Assets $ Debt & Liab $
Calculate the EXTERNAL FUNDING NEEDED.