In: Finance
Garlington Technologies Inc.'s 2019 financial statements are shown below:
Income Statement for December 31, 2019
Sales | $4,000,000 |
Operating costs | 3,200,000 |
EBIT | $ 800,000 |
Interest | 120,000 |
Pre-tax earnings | $ 680,000 |
Taxes (25%) | 170,000 |
Net income | 510,000 |
Dividends | $ 190,000 |
Balance Sheet as of December 31, 2019
Cash | $ 160,000 | Accounts payable | $ 360,000 | |
Receivables | 360,000 | Line of credit | 0 | |
Inventories | 720,000 | Accruals | 200,000 | |
Total CA | $1,240,000 | Total CL | $ 560,000 | |
Fixed assets | 4,000,000 | Long-term bonds | 1,000,000 | |
Total Assets | $5,240,000 | Common stock | 1,100,000 | |
RE | 2,580,000 | |||
Total L&E | $5,240,000 |
Suppose that in 2020 sales increase to $4.4 million and that 2020 dividends will increase to $166,000. Forecast the financial statements using the forecasted financial statement method. Assume the firm operated at full capacity in 2019. The long-term bonds have an interest rate of 12%. New financing will be with a line of credit. Assume it will be added at the end of the year. Cash does not earn any interest income. Enter your answers as positive values. Do not round intermediate calculations. Round your answers to the nearest dollar.
Garlington Technologies Inc. Pro Forma Income Statement December 31, 2020 |
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Sales | $ | ||
Operating costs | $ | ||
EBIT | $ | ||
Interest | $ | ||
Pre-tax earnings | $ | ||
Taxes (25%) | $ | ||
Net income | $ | ||
Dividends: | $ | ||
Addition to RE: | $ |
Garlington Technologies Inc. Pro Forma Balance Statement December 31, 2020 |
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Cash | $ | ||
Receivables | $ | ||
Inventories | $ | ||
Total current assets | $ | ||
Fixed assets | $ | ||
Total assets | $ | ||
Accounts payable | $ | ||
Line of credit | $ | ||
Accruals | $ | ||
Total current liabilities | $ | ||
LT bonds | $ | ||
Common stock | $ | ||
Retained earnings | $ | ||
Total L&E | $ |