Question

This is a 3-part question:

(1) Analyze the financial statements below as an individual who would invest in this company. Would you invest? Why or why not? Support your answer using what you have learned and type an essay supporting your answer. (6 points)

(2) Sales increase by 10 percent. What are the Additional Funds Needed (AFN)? (2.5 points)

(3) Assume you need $100,000 in financing for Additional Funds Needed. You go to the bank and they will loan you $100,000 at 5 percent interest. What is your annual payment to pay off this loan? (2.5 points)

The balance sheet and income statement shown below are for Pettijohn Inc.

Balance Sheet (Millions of $)
Assets	2012
Cash and securities	$ 1,554.0
Accounts receivable	9,660.0
Inventories	13,440.0
Total current assets	$24,654.0
Net plant and equipment	17,346.0
Total assets	$42,000.0
Liabilities and Equity
Accounts payable	$ 7,980.0
Notes payable	5,880.0
Accruals	4,620.0
Total current liabilities	$18,480.0
Long-term bonds	10,920.0
Total debt	$29,400.0
Common stock	3,360.0
Retained earnings	9,240.0
Total common equity	$12,600.0
Total liabilities and equity	$42,000.0
Income Statement (Millions of $)	2012
Net sales	$58,800.0
Operating costs except depr'n	$54,978.0
Depreciation	$ 1,029.0
Earnings bef int and taxes (EBIT)	$ 2,793.0
Less interest	1,050.0
Earnings before taxes (EBT)	$ 1,743.0
Taxes	$     610.1
Net income	$ 1,133.0
Other data:
Shares outstanding (millions)	175.00
Common dividends	$   509.83
Int rate on notes payable & L-T bonds	6.25%
Federal plus state income tax rate	35%

Year-end stock price

$77.69

Answer 1