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ACC - Peabody & Peabody

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Question;Pro forma balance sheet Peabody & Peabody has 2015 sales of $10 million. Itwishes to analyze expected performance and financing needs for 2017, which is2 years ahead. Given the following information, respond to parts a and b.(1) The percents of sales for items that vary directly with sales are as follows:Accounts receivable, 12%Inventory, 18%Accounts payable, 14%Net profit margin, 3%(2) Marketable securities and other current liabilities are expected to remainunchanged.(3) A minimum cash balance of $480,000 is desired.(4) A new machine costing $650,000 will be acquired in 2016, and equipmentcosting $850,000 will be purchased in 2017. Total depreciation in 2016 isforecast as $290,000, and in 2017 $390,000 of depreciation will be taken.(5) Accruals are expected to rise to $500,000 by the end of 2017.(6) No sale or retirement of long-term debt is expected.(7) No sale or repurchase of common stock is expected.(8) The dividend payout of 50% of net profits is expected to continue.(9) Sales are expected to be $11 million in 2016 and $12 million in 2017.(10) The December 31, 2015, balance sheet follows.Peabody & Peabody Balance Sheet December 31, 2015 ($000)Assets Liabilities and stockholders? equityCash $ 400 Accounts payable $1,400Marketable securities 200 Accruals 400Accounts receivable 1,200 Other current liabilities 80Inventories 1,800 Total current liabilities $1,880Total current assets $3,600 Long-term debt 2,000Net fixed assets 4,000 Total liabilities 3,880Total assets $7,600 Common equity 3,720Total liabilities andstockholders? equity $7,600a. Prepare a pro forma balance sheet dated December 31, 2017.b. Discuss the financing changes suggested by the statement prepared in part a.Please prepare in excel format

 

Paper#39408 | Written in 18-Jul-2015

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