Question
In: Accounting
Morrisey Technologies Inc. ‘s 2019 financial statements are shown below: Cash $ 180,000 Accounts payable $ ...
Morrisey Technologies Inc. ‘s 2019 financial statements are shown below:
|
Cash |
$ 180,000 |
Accounts payable |
$ 360,000 |
|
Receivables |
360,000 |
Notes payable |
156,000 |
|
Inventories |
720,000 |
Accrued liabilities |
180,000 |
|
Fixed assets |
1,440,000 |
Common stock |
1,800,000 |
|
Retained earnings |
204,000 |
|
Sales |
$3,600,000 |
|
Operating costs |
3,279,720 |
|
Interest |
20,280 |
|
Tax rate |
40% |
|
Price per share |
$24.00 |
|
Earnings per share (EPS) |
$1.80 |
|
Dividends per share (DPS) |
$1.08 |
Suppose that in 2020 sales increase by 10% over 2019 sales and that 2020 DPS will increase to $1.12. Construct the projected financial statements for 2020. Use AFN to balance the pro forma balance sheet. How much additional capital (AFN) will be required (assume that it will be obtained at the end of the year, giving the interest expense for 2020 remain unchanged)? Assume the firm operated at full capacity in 2019.
Tip: Instead of using the AFN formula, you need to prepare the projected income statement first, then determine the amount of increase in R/E, and prepare a projected balance sheet with the balancing figure be the AFN (added to the notes payable).
Solutions
ekkarill92 answered 1 year agoRelated Solutions
Garlington Technologies Inc.'s 2019 financial statements are shown below: Income Statement for December 31, 2019 Sales...
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...
Garlington Technologies Inc.'s 2019 financial statements are shown below: Income Statement for December 31, 2019 Sales...
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...
Garlington Technologies Inc.'s 2019 financial statements are shown below: Income Statement for December 31, 2019 Sales...
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...
Garlington Technologies Inc.'s 2019 financial statements are shown below: Income Statement for December 31, 2019 Sales...
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...
Garlington Technologies Inc.'s 2019 financial statements are shown below: Income Statement for December 31, 2019 Sales...
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...
Garlington Technologies Inc.'s 2019 financial statements are shown below: Income Statement for December 31, 2019 Sales...
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...
Morrissey Technologies Inc.'s 2019 financial statements are shown here. Morrissey Technologies Inc.: Balance Sheet as of...
Morrissey Technologies Inc.'s 2019 financial statements are
shown here.
Morrissey Technologies Inc.: Balance Sheet
as of December 31, 2019
Cash
$180,000
Accounts payable
$360,000
Receivables
360,000
Notes payable
56,000
Inventories
720,000
Accrued liabilities
180,000
Total current assets
$1,260,000
Total current liabilities
$596,000
Long-term debt
100,000
Fixed assets
1,440,000
Common stock
1,800,000
Retained earnings
204,000
Total assets
$2,700,000
Total liabilities and equity
$2,700,000
Morrissey Technologies Inc.: Income
Statement for December 31, 2019
Sales
$3,600,000
Operating costs including depreciation
3,279,720
EBIT
$320,280...
Morrissey Technologies Inc.'s 2019 financial statements are shown here. Morrissey Technologies Inc.: Balance Sheet as of...
Morrissey Technologies Inc.'s 2019 financial statements are
shown here.
Morrissey Technologies Inc.: Balance Sheet
as of December 31, 2019
Cash
$180,000
Accounts payable
$360,000
Receivables
360,000
Notes payable
56,000
Inventories
720,000
Accrued liabilities
180,000
Total current assets
$1,260,000
Total current liabilities
$596,000
Long-term debt
100,000
Fixed assets
1,440,000
Common stock
1,800,000
Retained earnings
204,000
Total assets
$2,700,000
Total liabilities and equity
$2,700,000
Morrissey Technologies Inc.: Income
Statement for December 31, 2019
Sales
$3,600,000
Operating costs including depreciation
3,279,720
EBIT
$320,280...
Morrissey Technologies Inc.'s 2019 financial statements are shown here. Morrissey Technologies Inc.: Balance Sheet as of...
Morrissey Technologies Inc.'s 2019 financial statements are
shown here. Morrissey Technologies Inc.: Balance Sheet as of
December 31, 2019 Cash $180,000 Accounts payable $360,000
Receivables 360,000 Notes payable 56,000 Inventories 720,000
Accrued liabilities 180,000 Total current assets $1,260,000 Total
current liabilities $596,000 Long-term debt 100,000 Fixed assets
1,440,000 Common stock 1,800,000 Retained earnings 204,000 Total
assets $2,700,000 Total liabilities and equity $2,700,000 Morrissey
Technologies Inc.: Income Statement for December 31, 2019 Sales
$3,600,000 Operating costs including depreciation 3,279,720 EBIT
$320,280...
Financing Deficit Garlington Technologies Inc.'s 2019 financial statements are shown below: Income Statement for December 31,...
Financing Deficit
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...
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