Using “percentage of sales” approach, prepare pro forma income statement and balance sheet for year 2007, 2008 and 2009. Assuming the company will not issue new equity. Make your own assumptions regarding sales growth, account receivable policy and inventory, and assume other operating factors hold constant relationship with sales.
| Exhibit 2 – Balance Sheet | ||||||||||
| At December 31 | 2002 | 2003 | 2004 | 2005 | 2006E | 2007F | 2008F | 2009F | ||
| Assets | ||||||||||
| Cash | 705 | 1,542 | 1,818 | 2,158 | 1,955 | |||||
| Accounts Receivable | 3,485 | 4,405 | 6,821 | 10,286 | 14,471 | |||||
| Inventories | 3,089 | 2,795 | 3,201 | 3,291 | 3,847 | |||||
| Current Assets | 7,279 | 8,742 | 11,839 | 15,735 | 20,273 | – | – | – | ||
| Plant, Property, & Equipment (net) | 2,257 | 2,680 | 2,958 | 3,617 | 4,347 | |||||
| Other Assets | 645 | 645 | 645 | 645 | 645 | |||||
| Land | 450 | 1,750 | 2,853 | 2,853 | 2,853 | |||||
| Non-Current Assets | 3,352 | 5,075 | 6,456 | 7,115 | 7,844 | – | – | – | ||
| Total Assets | 10,631 | 13,817 | 18,295 | 22,850 | 28,117 | – | – | – | ||
| Liabilities & Shareholders Equity | ||||||||||
| Accounts Payable | 2,034 | 2,973 | 4,899 | 6,660 | 9,424 | |||||
| Current Portion of Long-term Debt | 315 | 352 | 525 | 730 | 649 | |||||
| Current Liabilities | 2,349 | 3,325 | 5,423 | 7,390 | 10,074 | – | – | – | ||
| Long-Term Debt | 3,258 | 4,400 | 5,726 | 7,123 | 8,480 | |||||
| Shareholders Equity | 5,024 | 6,091 | 7,146 | 8,336 | 9,563 | |||||
| Total Liabilities & Shareholders Equity | 10,631 | 13,817 | 18,295 | 22,850 | 28,117 | – | – | – | ||
| Exhibit 3 – Income Statement | ||||||||||
| For Years Ending December 31 | 2002 | 2003 | 2004 | 2005 | 2006E | 2007F | 2008F | 2009F | ||
| Sales | 24,652 | 26,797 | 29,289 | 35,088 | 42,597 | |||||
| Cost of Goods Sold | 20,461 | 21,706 | 23,841 | 28,597 | 35,100 | |||||
| Gross Profit | 4,191 | 5,091 | 5,448 | 6,491 | 7,497 | – | – | – | ||
| General & Administrative Expense | 1,999 | 2,138 | 2,372 | 2,877 | 3,578 | |||||
| Research & Development | 203 | 203 | 212 | 222 | 232 | |||||
| Depreciation & Amortization | 347 | 412 | 455 | 557 | 669 | |||||
| Earnings before Interest & Taxes | 1,641 | 2,338 | 2,408 | 2,836 | 3,018 | – | – | – | ||
| Interest | 187 | 349 | 440 | 547 | 658 | |||||
| Earnings before Taxes | 1,454 | 1,989 | 1,968 | 2,289 | 2,360 | – | – | – | ||
| Taxes | 264 | 696 | 689 | 801 | 826 | |||||
| Net Income | 1,191 | 1,293 | 1,279 | 1,488 | 1,534 | – | – | – | ||
On an averahe there are 20 % Growth in sales so we assume that 20 % increment ineach 2007,2008,and 2009 then previous year
There will be no change in Equatity
Only relevant change in Accounts payable , Recivable etc.
And we have been provided that assume other operating factors hold constant relationship with sales.
There is 40 % increament in account recevable, 16 % in inventory and 28 % increament in current Assets
Now we will calculate the figure foor the year 2007,2008 and 2009 as follow
| Exhibit 2 – Balance Sheet | |||
| At December 31 | 2007F | 2008F | 2009F |
| Assets | |||
| Cash | 2937.41 | 3774.2921 | 4303.916631 |
| Accounts Receivable | 20259.4 | 28363.16 | 39708.424 |
| Inventories | 4462.52 | 5176.5232 | 6004.766912 |
| Current Assets | 27659.33 | 37313.9753 | 50017.10754 |
| Plant, Property, & Equipment (net) | 4345.9 | 4344.8 | 4343.7 |
| Other Assets | 645 | 645 | 645 |
| Land | 2853 | 2853 | 2853 |
| Non-Current Assets | 7843.9 | 7842.8 | 7841.7 |
| Total Assets | 35503.23 | 45156.7753 | 57858.80754 |
| Liabilities & Shareholders Equity | |||
| Accounts Payable | 13287.84 | 18735.8544 | 26417.5547 |
| Current Portion of Long-term Debt | 720.39 | 799.6329 | 887.592519 |
| Current Liabilities | 14008.23 | 19535.4873 | 27305.14722 |
| Long-Term Debt | 10091.2 | 12008.528 | 14290.14832 |
| Shareholders Equity | 11403.8 | 13612.76 | 16263.512 |
| Total Liabilities & Shareholders Equity | 35503.23 | 45156.7753 | 57858.80754 |
| Exhibit 3 – Income Statement | |||
| For Years Ending December 31 | 2007F | 2008F | 2009F |
| Sales | 51116.4 | 61339.68 | 73607.616 |
| Cost of Goods Sold | 42120 | 50544 | 60652.8 |
| Gross Profit | 8996.4 | 10795.68 | 12954.816 |
| General & Administrative Expense | 4293.6 | 5152.32 | 6182.784 |
| Research & Development | 278.4 | 334.08 | 400.896 |
| Depreciation & Amortization | 802.8 | 963.36 | 1156.032 |
| Earnings before Interest & Taxes | 3621.6 | 4345.92 | 5215.104 |
| Interest | 789.6 | 947.52 | 1137.024 |
| Earnings before Taxes | 2832 | 3398.4 | 4078.08 |
| Taxes | 991.2 | 1189.44 | 1427.328 |
| Net Income | 1840.8 | 2208.96 | 2650.752 |
