Required: a1. Produce an income statement for 2020. Assume that net working capital will equal 50% of fixed assets. a2. Produce a balance sheet for 2020. Assume that net working capital will equal 50% of fixed assets. b. Now assume that the balancing item is debt and that no equity is to be issued. Prepare a completed pro forma balance sheet for 2020. c. Assume that the balancing item is debt and that no equity is to be issued, what is the projected debt ratio for 2020
The following tables contain financial statements for Dynastatics Corporation. Although the company has not been growing, it now plans to expand and will increase net fixed assets (i.e., assets net of
| INCOME STATEMENT, 2019 (Figures in $ thousands) |
||||||
| Revenue | $ | 1,800 | ||||
| Fixed costs | 68 | |||||
| Variable costs (80% of revenue) | 1,440 | |||||
| Depreciation | 80 | |||||
| Interest (8% of beginning-of-year debt) | 24 | |||||
| Taxable income | 188 | |||||
| Taxes (at 40%) | 75 | |||||
| Net income | $ | 113 | ||||
| Dividends | $ | 75 | ||||
| Addition to |
$ | 38 | ||||
| BALANCE SHEET, YEAR-END (Figures in $ thousands) |
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| 2019 | |||
| Assets | |||
| Net working capital | $ | 400 | |
| Fixed assets | 800 | ||
| Total assets | $ | 1,200 | |
| Liabilities and shareholders’ equity | |||
| Debt | $ | 300 | |
| Equity | 900 | ||
| Total liabilities and shareholders’ equity | $ | 1,200 | |
Required:
a1. Produce an income statement for 2020. Assume that net working capital will equal 50% of fixed assets.
a2. Produce a balance sheet for 2020. Assume that net working capital will equal 50% of fixed assets.
b. Now assume that the balancing item is debt and that no equity is to be issued. Prepare a completed pro forma balance sheet for 2020.
c. Assume that the balancing item is debt and that no equity is to be issued, what is the projected debt ratio for 2020?
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