2013 Proj 2014 Current Assets Cash $ 20 Accounts Receivable $ 240 Inventory $ 240 Total Current Assets $ 500 Net Plant & Equipment $ 500 Total Assets $ 1,000 Liabilities & Owners Equity Accounts Payable $ 100 Notes Payable $ 100 Total Current Liabilities $ 200 Long Term Debt $ 100 Total Liabilities $ 300 Common Stock $ 500 Retained Earnings $ 200 Total Stockholders' Equity $ 700 Total Liabilities, Equity $ 1,000 Income Statement Sales $ 2,000 COGS $ 1,200 Gross profit $ 800 Selling and Admin Expense $ 700 EBIT $ 100 Interest Expense $ 10 $ 20 EBT $ 90 Taxes @ 40% $ 36 Net Income $ 54 Common Dividend $ 21.6 Addition to Retained Earnings $ 32 1) 30% TWO PARTS: A) Using the above data and the AFN equation, compute the additional funds needed for 2014 if sales growth is expected to be 25% and the firm is operating at 100% capacity. B) Use the forecasted financial statements approach to compute additional funds needed if we assume all additional funds will be financed equally with notes payable and long-term debt. Assume "dividend payout ratio" in 2014 is the same ratio with 2013.

Question

2013  Proj 2014     Current Assets Cash  $ 20       Accounts Receivable  $ 240       Inventory  $ 240       Total Current Assets  $ 500       Net Plant & Equipment  $ 500       Total Assets  $ 1,000               Liabilities & Owners Equity        Accounts Payable  $ 100       Notes Payable  $ 100       Total Current Liabilities  $ 200       Long Term Debt  $ 100       Total Liabilities  $ 300       Common Stock  $ 500       Retained Earnings  $ 200       Total Stockholders' Equity  $ 700       Total Liabilities, Equity  $ 1,000                Income Statement Sales  $ 2,000       COGS  $ 1,200       Gross profit  $ 800       Selling and Admin Expense  $ 700       EBIT  $ 100       Interest Expense  $ 10   $ 20    EBT  $ 90       Taxes @ 40%  $ 36       Net Income  $ 54       Common Dividend  $ 21.6       Addition to Retained Earnings  $ 32               1) 30% TWO PARTS: A) Using the above data and the AFN equation, compute the additional funds needed for 2014 if sales growth is expected to be 25% and the firm is operating at 100% capacity. B) Use the forecasted financial statements approach to compute additional funds needed if we assume all additional funds will be financed equally with notes payable and long-term debt. Assume "dividend payout ratio" in 2014 is the same ratio with 2013.

Income Statement	2017
Net Sales	675
Cost of goods sold	210
Depreciation	50
EBIT	415
Interest Paid	15
EBT	400
Taxes (30%)	120
Net Income	280
Dividends	105
Addition to Retained Earnings	175

Assets	2016	2017	Liabilities and Shareholders equity	2016	2017
Current Assets			Current Liabilities
Cash	100	125	Accounts Payable	200	250
Accounts Receivable	250	350	Notes Payable	150	225
Inventory	400	375
Total Current Assets	750	850	Total Current Liabilities	350	475
			Long term debt	300	250
Fixed Assets			Stockholders equity
PPE	1500	1700	Common stock	300	300
Accumulated Depreciation	400	450	Retained earnings	900	1075
Net PPE	1100	1250	Total Shareholderâs Equity	1200	1375
Total Assets	1850	2100	Total Liabilities & Equity	1850	2100

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	2013	Proj 2014
Current Assets Cash	$ 20
Accounts Receivable	$ 240
Inventory	$ 240
Total Current Assets	$ 500
Net Plant & Equipment	$ 500
Total Assets	$ 1,000

Liabilities & Owners Equity
Accounts Payable	$ 100
Notes Payable	$ 100
Total Current Liabilities	$ 200
Long Term Debt	$ 100
Total Liabilities	$ 300
Common Stock	$ 500
Retained Earnings	$ 200
Total Stockholders' Equity	$ 700
Total Liabilities, Equity	$ 1,000

Income Statement Sales	$ 2,000
COGS	$ 1,200
Gross profit	$ 800
Selling and Admin Expense	$ 700
EBIT	$ 100
Interest Expense	$ 10	$ 20
EBT	$ 90
Taxes @ 40%	$ 36
Net Income	$ 54
Common Dividend	$ 21.6
Addition to Retained Earnings	$ 32

1) 30% TWO PARTS: A) Using the above data and the AFN equation, compute the additional funds needed for 2014 if sales growth is expected to be 25% and the firm is operating at 100% capacity. B) Use the forecasted financial statements approach to compute additional funds needed if we assume all additional funds will be financed equally with notes payable and long-term debt. Assume "dividend payout ratio" in 2014 is the same ratio with 2013.