The most recent financial statements of a company are shown in the link
A) Prepare proforma income statement and balance sheet for this company for the next year. You make the assumption that all assets, costs, and current liabilities will be allowed to increase proportionally to sales. However, long-term debt and common stock will not increase automatically. Next year the company will be paying dividends equal to 60 per cent of the net income. (Think what happens to the remaining amount?) Next year's sales are projected to increase by 30 per cent. The tax rate will remain the same as this year. Think what was the tax rate this year?
You should first make the proforma income statement because its net income will affect one of the items in the proforma balance sheet too. Think which one? Then complete the proforma balance sheet.
A) What is the imbalance in the proforma balance sheet?
B) What are the different options to balance this imbalance? Remember a balance sheet must be balanced!!!
A) Prepare proforma income statement and balance sheet for this company for the next year. You make the assumption that all assets, costs, and current liabilities will be allowed to increase proportionally to sales. However, long-term debt and common stock will not increase automatically. Next year the company will be paying dividends equal to 60 per cent of the net income. (Think what happens to the remaining amount?) Next year's sales are projected to increase by 30 per cent. The tax rate will remain the same as this year. Think what was the tax rate this year?
You should first make the proforma income statement because its net income will affect one of the items in the proforma balance sheet too. Think which one? Then complete the proforma balance sheet.
A) What is the imbalance in the proforma balance sheet?
B) What are the different options to balance this imbalance? Remember a balance sheet must be balanced!!!
