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 12 percent to $350 million. Current assets, fixed assets, and short-term debt are 15 percent, 75 percent, and 5 percent of sales, respectively. The company pays out 25 percent of its net income in dividends. The company currently has $140 million of long-term debt, and $68 million in common stock par value. The profit margin is 10 percent.

a.	Prepare the current balance sheet for the firm using the projected sales figure. (Accounts should be entered by order of liquidity. Do not round intermediate calculations and enter your answers in dollars, not millions of dollars, e.g. 1,234,567.)

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 and 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. (Accounts should be entered by order of liquidity. Do not round intermediate calculations and 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 and enter your answer in dollars, not millions of dollars, e.g. 1,234,567.)

Answer 1

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