Question

Consider the following simplified financial statements for the Wims Corporation (assuming no income taxes):

Income Statement				Balance Sheet
Sales	$	34,000		Assets	$	26,500		Debt	$	7,000
Costs		27,330						Equity		19,500
Net income	$	6,670		Total	$	26,500		Total	$	26,500
The company has predicted a sales increase of 15 percent. Assume the company pays out half of net income in the form of a cash dividend. Costs and assets vary with sales, but debt and equity do not. Prepare the pro forma statements.

Answer 1

=E7-67 C D X r för A B 3 Pro forma income statement 4. Sales $ 39,100.00 5 Costs $ 31,429.50 6 7 Net income $ 7,670.50 E F G H Pro forma balance sheet 30,475.00 Debt $ 7,000.00 Equity $ 23,335.25 =19500+7670.5*0.5 Assets $ Total $ 30,475.00 Total $30,335.25 9 External financing needed $ 139.75 10 (Total assets - Total liabilities and equity)

Please rate thumbs up