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ACC - Problem 6-12 and 6-13




Question;6-12 FORECASTING PRO FORMA FINANCIAL STATEMENTS Prepare a pro forma incomestatement and balance sheet for Webb Enterprises, found in Problem 6-7, where revenues are expected to grow by 20% in 2011. Make the following assumptions in makingyour forecast of the?rm?s balance sheet for 2011:? The income statement expenses are a constant percent of revenues except for interest, which remains equal in dollar amount to the 2010 level, and taxes, which equal40% of earnings before taxes.? The cash and marketable securities balance remains equal to $500, and the remaining current asset accounts and?xed assets increase in proportion to revenues for2010.? Net property, plant, and equipment increase in proportion to the increase in revenues.? Accounts payable increase in proportion to?rm revenues.? Owners? equity increases by the amount of?rm net income for 2011 (no cash dividends are paid).? Long-term debt remains unchanged, and short-term debt changes in an amount that balances the balance sheet.6-13 FORECASTING FIRM FCF Using your pro forma?nancial statements from Problem 6-12, estimate the?rm?s FCF for 2011.


Paper#41202 | Written in 18-Jul-2015

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