Make a Proforma Income Statement and ProForma Balance Sheet. Use 15% as the Sales Growth Rate, all other data remain the same. Ziegen, Inc.Income Statementfor 2013SalesNet IncomeZiegen, Inc.Balance Sheetfor 2013Current assetsNet fixed assetsTotalAccounts payableAccrued expensesNotes payableCurrent liabilitiesLong-term debtTotal liabilitiesCommon stock (par)Paid-in capitalRetained earningsCommon equityTotal$10,000,000$ 500,000$ 2,000,0004,000,000$6,000,000$ 1,000,0001,000,000500,000$ 2,500,0002,000,000$ 4,500,000100,000200,0001,200,000$1,500,000$ 6,000,000Calculation$.5m/$10m =Calculation$2m/$10m =$4m/$10m =$1m/$10m =$1m/$10m =Ziegen, Inc.Pro Forma Income% of 2013 Sales Statement for 20145.0%% of 2013 Sales20.0%40.0%10.0%10.0%NAⓇNAⓇΝΑ"NA"Calculation20%Sales growth rate =SalesNet IncomeZiegen, Inc.Pro Forma BalanceSheet for 2014Current assetsNet fixed assetsTotalAccounts payableAccrued expensesNotes payableCurrent liabilitiesLong-term debtTotal liabilitiesCommon stock (par)Paid-in capitalRetained earningsCommon equityProjected sources of financingDiscretionary financing needs (Plug figure)Total financing needs = Total assets$10m X (1+20) = $12,000,000$12m X (.05) =$ 600,000Calculation.20 x 12m =.40 x 12m =.10 × 12m =.10 x 12m =No changeNo changeNo changeNo changeCalculation$ 2,400,000$ 4,800,000$ 7,200,000$ 1,200,0001,200,000500,000$ 2,900,000$ 2,000,000$ 4,900,000100,000200,0001,500,0001,800,000$ 6,700,000$ 500,000$ 7,200,000"Not applicable. These account balances do not vary with sales.Projected retained earnings for 2014 equals $1,500,000, which is equal to the 2013 level of retained earnings of $1,200,000 plus net income of$600,000 less common dividends equal to 50% of projected net income, or $300,000.Discretionary financing needs (DFN) for 2014 is a "plug figure that equals the difference in the firm's projected total financing requirements or total assetsequal to $7,200,000 and projected sources of financing, which is $6,700,000. In this scenario DFN is $500,000.

It has been given that a 15% sales growth is to be used for the pro forma of income statement and…

Answered: Make a Proforma Income Statement and…

Fundamentals Of Financial Management, Concise Edition (mindtap Course List)

10th Edition

ISBN:9781337902571

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter3: Financial Statements, Cash Flow, And Taxes

Section: Chapter Questions

Problem 19SP

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Question

Make a Proforma Income Statement and ProForma Balance Sheet. Use 15% as the Sales Growth Rate, all other data remain the same.

Ziegen, Inc.
Income Statement
for 2013
Sales
Net Income
Ziegen, Inc.
Balance Sheet
for 2013
Current assets
Net fixed assets
Total
Accounts payable
Accrued expenses
Notes payable
Current liabilities
Long-term debt
Total liabilities
Common stock (par)
Paid-in capital
Retained earnings
Common equity
Total
$10,000,000
$ 500,000
$ 2,000,000
4,000,000
$6,000,000
$ 1,000,000
1,000,000
500,000
$ 2,500,000
2,000,000
$ 4,500,000
100,000
200,000
1,200,000
$1,500,000
$ 6,000,000
Calculation
$.5m/$10m =
Calculation
$2m/$10m =
$4m/$10m =
$1m/$10m =
$1m/$10m =
Ziegen, Inc.
Pro Forma Income
% of 2013 Sales Statement for 2014
5.0%
% of 2013 Sales
20.0%
40.0%
10.0%
10.0%
NAⓇ
NAⓇ
ΝΑ"
NA"
Calculation
20%
Sales growth rate =
Sales
Net Income
Ziegen, Inc.
Pro Forma Balance
Sheet for 2014
Current assets
Net fixed assets
Total
Accounts payable
Accrued expenses
Notes payable
Current liabilities
Long-term debt
Total liabilities
Common stock (par)
Paid-in capital
Retained earnings
Common equity
Projected sources of financing
Discretionary financing needs (Plug figure)
Total financing needs = Total assets
$10m X (1+20) = $12,000,000
$12m X (.05) =
$ 600,000
Calculation
.20 x 12m =
.40 x 12m =
.10 × 12m =
.10 x 12m =
No change
No change
No change
No change
Calculation
$ 2,400,000
$ 4,800,000
$ 7,200,000
$ 1,200,000
1,200,000
500,000
$ 2,900,000
$ 2,000,000
$ 4,900,000
100,000
200,000
1,500,000
1,800,000
$ 6,700,000
$ 500,000
$ 7,200,000
"Not applicable. These account balances do not vary with sales.
Projected retained earnings for 2014 equals $1,500,000, which is equal to the 2013 level of retained earnings of $1,200,000 plus net income of
$600,000 less common dividends equal to 50% of projected net income, or $300,000.
Discretionary financing needs (DFN) for 2014 is a "plug figure that equals the difference in the firm's projected total financing requirements or total assets
equal to $7,200,000 and projected sources of financing, which is $6,700,000. In this scenario DFN is $500,000.

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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