In: Finance
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 12 percent to $490 million. Current assets, fixed assets, and short-term debt are 20 percent, 75 percent, and 10 percent of sales, respectively. The company pays out 25 percent of its net income in dividends. The company currently has $134 million of long-term debt, and $62 million in common stock par value. The profit margin is 10 percent.
b. Based on the sales growth forecast, how much
does the company need in external funds for the upcoming fiscal
year using the EFN equation from the textbook? (Do not
round intermediate calculations. Enter your answer in dollars, not
millions of dollars, e.g. 1,234,567.)
c-1. Prepare the firm’s pro forma balance sheet
for the next fiscal year. (Do not round intermediate
calculations. Accounts should be entered by order
of liquidity (e.g. current accounts before long-term).
Enter your answers in dollars, not millions of dollars,
e.g. 1,234,567.)
c-2. Calculate the external funds needed.
(Do not round intermediate calculations. Enter your answer
in dollars, not millions of dollars, e.g.
1,234,567.)
Use spreadsheet for the required computations. Enter values and formulas in the spreadsheet as shown in the image below.
The obtained result is provided below.