Question

Consider the following simplified financial statements for the Wims Corporation (assuming no income taxes): Income Statement Sales$38,000 Assets $27,300 Debt $6,700 Costs 32,600 Balance Sheet Equity 20,600 Net income $ 5,400 Total $27,300 Total $27,300 The company has predicted a sales increase of 15 percent. Assume Wims 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. (Input all amounts as positive values. Do not round intermediate calculations.) Pro forma income statement Pro forma balance sheet Sales Costs Net income Assets Debt Equity Total Total

Also, determine external financing need. (Do not round intermediate calculations. A negative answer should be indicated by a minus sign.)

Answer 1

1 Pro forma income statement 2 Sales 3 Costs 4 Pro forma balance sheet Assets $43,700 $37,490 31,395 Debt6,700 Equity 23,705 5 Net income$6,210 Total $31,395 Total $30,405 External financing needed $990) 8 (Total assets - Total liabilities and equity)

1 Pro forma income statement 2 Sales 3 Costs 32600 1.15 4 5 Net income E+B2-B3 Pro forma balance sheet 10510 -38000 1.15 Assets 27300*1.15Debt 6700 Equity -20600+6210*0.5 Total SUM(E2:E4) TotaSUM(G2:G4) 7 External financing needed 8 (Total assets - Total liabilities and equity) EE5-G5