In: Finance
Assignment
You are a consultant, external to this firm. Create two years (2020 and 2021) of pro forma income statements and balance sheets and the statement of cash flows, including operating, investing and financing sections for 2020 only.
Techno Corporation
Techno Corp
Income Statement
Actual results 2019 for 12 months ending December 31, 2019
Sales revenue (10,000 units at $250 each) | $2,500,000 |
Cost of goods sold ($100 per unit) | ($1,000,000) |
Gross profit | $1,500,000 |
Operating expenses | ($500,000) |
Operating profit | $1,000,000 |
Interest expense | ($200,000) |
Net profits before taxes | $800,000 |
Taxes (30%) | ($240,000) |
Net profits after tax | $560,000 |
Dividends on common stock | $224,000 |
Techno Corp
Balance Sheet
December 31, 2019
ASSETS | $500,000 |
Marketable securities | $300,000 |
Accounts receivable | $500.000 |
Inventory | $400,000 |
Total current assets | $1,700,000 |
Net fixed assets | $2,000,000 |
Total assets | $3,700,000 |
LIABILITIES AND STOCKHOLDER’S EQUITY | |
Accounts payable | $150,000 |
Taxes payable | $120,000 |
Notes payable (long-term debt due within one year) | $200,000 |
Other current liabilities | $200,000 |
Total current liabilities | $670,000 |
Long-term debt | $1,800,000 |
Total liabilities | $2,470,000 |
Common stock | $500,000 |
Retained earnings | $730,000 |
Total liabilities and stockholder’s equity | $3,700,000 |
Techno Corporation Paper
Techno Corporation is developing its pro forma financial statement forecasts for 2020 and 2021. Its actual results for 2019 are shown in the income statement and balance sheet.
Background
Note:
1. It is assumed that "Asset" includes cash, and thus the cash used during the year is reduced from Assets in balance sheet.
2. No investment in marketable securities have been done during the year as the cash is not in excess of $500000.
3. All the amounts are in $.
4. Amount of Tax Payable is half of current year tax payable, assuming the balance is paid in cash as advance tax.
5. Rate of Tax is assumed to be same as of previous year.