Question

Consider the following simplified financial statements for the Wims Corporation (assuming no income taxes)

Income Statement				Balance Sheet
Sales	$	45,700		Assets	$	21,900		Debt	$	5,900
Costs		40,100						Equity		16,000
Net income	$	5,600		Total	$	21,900		Total	$	21,900

The company has predicted a sales increase of 6 percent. Assume the company pays out half of net income in the form of a cash dividend. Costs and assets vary with sales, but debt and equity do not.

Prepare the pro forma statements. (Input all amounts as positive values. Do not round intermediate calculations and round your answers to the nearest whole dollar amount.)

Consider the following simplified financial statements for the Wims Corporation (assuming no income taxes):

Income Statement				Balance Sheet
Sales	$	45,700		Assets	$	21,900		Debt	$	5,900
Costs		40,100						Equity		16,000
Net income	$	5,600		Total	$	21,900		Total	$	21,900

The company has predicted a sales increase of 6 percent. Assume the company pays out half of net income in the form of a cash dividend. Costs and assets vary with sales, but debt and equity do not.

	Pro forma income statement Pro forma balance sheet Sales Assets Debt Costs Equity Net income Total Total

What is the external financing needed? (Do not round intermediate calculations. A negative answer should be indicated by a minus sign.)

Answer 1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

BY PRO FORMA BALANCE SHEET, WE CAN DETERMINE EFN.

I HAVE ALSO SOLVED EFN BY USING EQUATION ALSO.