Question

Cheryl Colby, CFO of Charming Florist Ltd., has created the firm’s pro forma balance sheet for the next fiscal year. Sales are projected to grow by 18 percent to $391 million. Current assets, fixed assets, and short-term debt are 23 percent, 129 percent, and 14.5 percent of sales, respectively. Charming Florist pays out 30 percent of its net income in dividends. The company currently has $111 million of long-term debt, and $37 million in common stock par value. The profit margin is 7 percent.

Required:

a.	Construct the current balance sheet for the firm using the projected sales figure. (Do not include the dollar signs ($). Round your answers to the nearest whole dollar amount. (e.g.,1,234,567))

Assets		Liabilities and equity
Current assets	$	Short-term debt	$
		Long-term debt	$
Fixed assets
		Common stock	$
		Accumulated retained earnings
		Total equity	$
Total assets	$	Total liabilities and equity	$

b.	Based on Ms. Colby’s sales growth forecast, how much does Charming Florist need in external funds for the upcoming fiscal year? (Do not include the dollar sign ($). Round your answer to the nearest whole dollar amount. (e.g., 1,234,567))

External funds needed

$

c.

Construct the firm’s pro forma balance sheet for the next fiscal year and confirm the external funds needed that you calculated in part (b). (Do not include the dollar signs ($). Round your answers to the nearest whole dollar amount. (e.g.,1,234,567). The balance sheet should not balance by the EFN.)

Assets		Liabilities and equity
Current assets	$	Short-term debt	$
		Long-term debt	$
Fixed assets
		Common stock	$
		Accumulated retained earnings
		Total equity	$
Total assets	$	Total liabilities and equity	$

Answer 1

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