Business Administration - Management FIS403 Lecture Notes - Lecture 4: Current Liability, Dividend Payout Ratio, Profit Margin
30 May 2018
School
Department
Professor
Sources for Pro Forma Balance Sheet
Cash – required balance
Marketable Securities – NC
Accounts Receivable – Table 4-9 ($20,000 Sales * 80%)
Inventory – Income Analysis
Plant & Equipment – beginning balance + $18,000 expenditures
from Cash Outflows
Accounts Payable – Table 4-13 – material purchases in June
n/30
Notes Payable – Table 4-15 – cumulative loan balance in June
Long Term Debt – NC
Common Stock – NC
Retained Earnings – from income analysis
Percentage of Sales Method
Balance Sheet using
Percent-of-Sales Method
Assumes that B/S accounts will maintain a constant percentage
relationship to sales
More sales will mean more assets which will require more
financing
Can be summarized by using the Required New Funding formula
Percent-of-Sales Method
Required New Funds (RNF) =
• Spontaneous asset increase (+60%)
$60,000
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