Question

Chapter 4:

3. Fire Corp financial statements:

Pro forma income statement					Pro forma balance sheet
Sales	$      32,000			Assets	$25,300		Debt	$        5,800
Costs	$        24,400				________		Equity	$        19,500
Net income	$        7,600			Total	$25,300		Total	$      25,300

It expects 15% sales increase. It also predicts every item on the balance sheet will increase

by 15% as well.

1.Create the pro forma statements.

2. What’s the plug variable here?

3. If Fire Corp pays half of income as dividend, cost and assets vary with sales, but not debt and equity, what’s the EFN?

Answer 1