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17 Apr 2018

ProjectedIncome statement for Year Ending Dec 31, 2004 Projected balancesheet at December 31, 2004
Amount Assets Amount
Projected sales $3,600 Cash (1.5% of sales) 54
COGS Accounts receivable (12% of sales) 432
Beginning inventory $418 Inventory (16% of sales) 576
Purchases $2,750 Current assets 0
$3,168 PP&E (grow with sales) 210
Ending inventory $576 Total assets 1,272
COGS (72%of sales) $2,592
Gross profit $1,008 Liabilities
Less: Operating expenses (25%of sales) $900 Notes payable (AFN = plug) 675
Operating income $108 Accounts payable 75
Plus: Purchase discounts (2%of (2750-660)) $42 Accrued expenses 52
Less: Interest $46 Long-term debt - current portion 7
Net income before taxes $90 Current liabilities 852
Provision for incometaxes* $19 Long term debt 43
Net income after taxes $71 Total liabilities 844
Net worth 428
* 15% rate on first $50K Total liabilities and net worth 1272
25% on next$25K

34% thereafter

Would a credit line of $465,000 be sufficent to meet thecompanies needs?

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Irving Heathcote
Irving HeathcoteLv2
19 Apr 2018

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Calculate the external financing needed given the following financial statements. Assume that all costs, all assets, and accounts payable change proportionally with sales. Sales are projected to grow by 25%. Also assume that the company is operating at full capacity.

Current Statement of Comprehensive Income Sales $50,000 CoGS 30,000 EBDIT 20,000 Depreciation 10,000 EBIT 10,000 Interest expense 5,000 Taxable income 5,000 Taxes (35%) 1,750 Net Income 3,250 Dividends 975 Addition to RE 2,275

Current Statement of Financial Position Cash $8,000 Accounts receivable 22,000 Inventory 30,000 Total current assets 60,000 Fixed assets 90,000 Total assets $150,000 Accounts payable $15,000 Notes payable 5,000 Total current liabilities 20,000 Long-term debt 40,000 Common stock 40,000 Retained earnings 50,000 Total owners’ equity 90,000 Total Liabilities and OE $150,000

Select one answer

A- $33,750

B- $34,656.25

C- $30,906.25

D- $37,500

E- $22,500

WeaverCorporation's stock is selling for $16 per share. Weaver providedthe following financial statements. Use these statements to preparecomprehensive ratio analysis tables similar to those illustrated inthe chapter.
WEAVER CORPORATION
Comparative Balance Sheet
December 31, 20X3 and 20X2
Assets 20X3 20X2
Current assets
Cash $ 500,000 $ 370,000
Accounts receivable 350,000 290,000
Inventories 90,000 110,000
Total current assets $ 940,000 $ 770,000
Property, plant, & equipment
Land $ 200,000 $ 200,000
Building 650,000 650,000
Equipment 950,000 900,000
$ 1,800,000 $ 1,750,000
Less: Accumulated depreciation (365,000) (325,000)
Total property, plant, & equipment $ 1,435,000 $ 1,425,000
Total assets $ 2,375,000 $ 2,195,000
Liabilities
Current liabilities
Accounts payable $ 160,000 $ 200,000
Interest payable 40,000 30,000
Total current liabilities $ 200,000 $ 230,000
Long-term liabilities
Long-term note payable 800,000 700,000
Total liabilities $ 1,000,000 $ 930,000
Stockholders' equity
Common stock ($0.50 par) $ 100,000 $ 100,000
Paid-in capital in excess of par 655,000 655,000
Retained earnings 620,000 510,000
Total stockholders' equity $ 1,375,000 $ 1,265,000
Total liabilities and equity $ 2,375,000 $ 2,195,000
WEAVER CORPORATION
Statement of RetainedEarnings
For the Year Ending December 31,20X3
Beginning retained earnings, January 1 $ 510,000
Plus: Net income 160,000
$ 670,000
Less: Dividends 50,000
Ending retained earnings, December 31 $ 620,000
WEAVER CORPORATION
Income Statement
For the year ending December 31,20X3
Revenues $ 1,685,000
Cost of goods sold 980,000
Gross profit $ 705,000
Operating expenses
Salaries $ 245,000
Interest 65,000
Depreciation 40,000
Other operating expenses 155,000 505,000
Income before income taxes $ 200,000
Less: Income taxes 40,000
Net income $ 160,000
Current Ratio 4.70
Current Assets ÷ CurrentLiabilities $940,000 ÷ $200,000
Quick Ratio
Debt to Total AssetsRatio
Debt to Total EquityRatio
Times Interest EarnedRatio
Accounts Receivable TurnoverRatio
Inventory TurnoverRatio
Net Profit on Sales
Gross Profit Margin
Return on Assets
Return on Equity
EPS
P/E
Dividend Rate/Yield
Dividend PayoutRatio
Book Value Per Share

Based on your review of the financial statements, what was the major reason that the company's borrowing need increased in 20Y3?

A) increase in inventory

B) fixed asset purchases

C) change in net income

D) dividends paid

Defenders Designs, Inc.
Balance Sheets (Common Size)
(in $000s)
As At December 31:

Assets

20Y3

%

20Y2

%

20Y1

%

Current assets

Cash and equivalents

$310

9.5

$230

7.8

$221

8.6

Accounts receivable

1,194

36.6

846

28.8

794

31.1

Raw materials

501

15.4

611

20.8

440

17.2

Work in process

452

13.9

409

13.9

275

10.8

Finished goods

146

4.5

156

5.3

156

6.1

Total inventory

1,099

33.7

1,176

40.0

871

34.1

Other current assets

36

1.1

41

1.4

23

0.9

Total current assets

2,639

80.9

2,293

78.1

1,909

74.7

Gross fixed assets

699

21.4

723

24.6

701

27.4

Less: accumulated depreciation

117

3.6

99

3.4

89

3.5

Net fixed assets

582

17.8

624

21.2

612

24.0

Patents and trademarks

40

1.2

20

0.7

34

1.3

TOTAL ASSETS

$3,261

100

$2,937

100

$2,555

100

LIABILITIES AND EQUITY

Current liabilities

Current portion-LTD

$19

0.6

$19

0.6

$19

0.7

Notes Payable

810

24.8

775

26.4

745

29.2

Note payable – Jack Newsome-subordinated

200

6.1

200

6.8

200

7.8

Accounts payable

1,053

32.3

834

28.4

551

21.6

Accrued expenses

288

8.8

207

7.0

155

6.1

Other current liabilities

11

0.3

25

0.9

12

0.5

Total current liabilities

2,381

73.0

2,060

70.1

1,682

65.8

Long-term debt

162

5.0

169

5.8

175

6.8

Other noncurrent liabilities

3

0.1

3

0.1

3

0.1

Total liabilities

2,546

2,232

1,860

Owners’ equity

715

21.9

705

24.0

695

27.2

TOTAL LIABILITIES AND EQUITY

$3,261

100

$2,937

100

$2,555

100
Defenders Designs, Inc.
Income Statements
(in $000s)
Years Ended December 31:

20Y3

20Y2

20Y1

Sales

$8,010

$7,506

$6,515

COGS

6,328

6,377

5,473

Gross profit

1,682

1,129

1,042

Selling, general & admin expenses

1,315

858

706

Depreciation expense

26

24

18

Interest expense

84

78

54

Loss on disposition of fixed assets

27

0

0

Other expense

22

4

0

Net income before taxes

208

165

264

Provision for income taxes

100

79

130

Net income

$108

$86

$134

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