Question

Cary Computers makes bulk purchases of small computers, stocks them in conveniently located warehouses, and ships them to its chain of retail stores. Sales for 2002 were $450 million. They are forecasted to increase to $500 million in 2003. Additional information and relevant financial ratios are given below.. Minimum cash balance required : $1.8 million Average collection period (accounts receivable/sales/365)): 60 days Inventory turnover (COGS/inventory): 3.18 Net fixed assets: Current level of $216 million. The firm expects to acquire new plant and equipment worth $8 million in 2003. Accounts payable: 4% of annual sales LT debt: existing LT debt is $110 million out of which the company expects to repay $15 million in 2003. Common stock, expected to remain constant at its 2002 level of $120 million. COGS: 70% of sales Depreciation: Annual depreciation for 2003 expected to be $15 million. Net profit margin: 6% of projected sales in 2003. Dividends: expected to be 40% of net income. Retained earnings at the end of 2002: 130 million. a) Based on the information given above, forecast the income statement for year ended December 31, 2003. b) Based on the information given above, and your estimate of retained earnings from part(a), forecast the pro forma balance sheet as of December 31, 2003, Assume that any additional funds requirement will be met by notes payable. The firm does not have any notes payable at the end of 2002. 3 (12pt) - - T- Paranıranh Arial

Answer 1

the solution is as follows

Farebited In love stuberment & million 350 157 Sales wy! 70% of cost of Grods sold bosoly profit les operating expenses Roepstciation otwy Expenss (Bal P.4) 105 15 Net profit 6% of sales less Dividend 46% of Palone 30. 12 Retained earning Ant (milliy 224 Force bited Relancesheet Amt Cavit Anith Gertal 140 Cach Wes , tepagesels 195 Freed Alrets Petersed Eurranty 130 148 lesy preposiciul Tom Accounts, pegable Inventory (wete Aire Croten) 44 209. + corrent year 18 55-6 416 '4% onts notes payuble (El.png) 307 307 & 26 . * collection Sales Lia 500 Average Trage Bettas Aprzeer - B3:33+=4166 $ 41,6 million debtors Prientory turrioves last of Goods sold Everge inventry = 5976 Hierage opening & closing - 2 337 CS Scanned with CamScanner

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