Question

Upton Computers makes bulk purchases of small computers, stocks them in conve- niently located warehouses, ships them to its chain of retail stores, and has a staff to advise customers and help them set up their new computers. Upton's balance sheet as of December 31, 2010, is shown here (millions of dollars): Cash Receivables Inventories S 3.5 Accounts payable s 9.0 18.0 26.0 Notes payable 58.0Accruals 87.5 35.0 Total current assets Net fixed assets Total current liabilities Mortgage loan Common stock Retained earnings 35.5 6.0 15.0 66.0 $122.5 Total assets $122.5 Total liabilities and equity

Answer 1

Year	2010	Basis for projections	2011
Net sales	350	+20%	420
Net Income (15%)	53		63
		Dividend	0
		Increase in retained earnings	63
Cash	3.50	10.00% of sales	4.20
Receivable	26.00	7.43% of sales	31.20
Inventories	58.00	16.57% of sales	69.60
Total current assets	87.50		105.00
Net fixed assets	35.00	10% of sales	42.00
Total assets	122.50		147.00
Accounts payable	9.00	25.71% of sales	10.80
Accruals	8.50	2.43% of sales	10.20
Notes payable	18.00		18.00
Total current liabilities	35.50		39.00
Mortgage loan	6.00		6.00
Common stock	15.00		15.00
Retained earnings	66.00	+63	129.00
Total liabilities and Equity	122.50		189.00
		EFN Needed	-42.00
NOTE: There is no need for external financing. There is a surplus of $42.00 million
{Please check the NI %; is it 15%?