AssumptionsValues
growth rate in sales 50%
current ratio 2.60
debt ratio 43%
interest rate on new short term debt 9%
interest rate on new long term debt 11%
dividend payout ratio30.00%
Question #1Question #2Question #3
All dollar values in $millionsYear-zeroPercentage ofYear-OneYear-OneYear-One
of Sales
Income Statement
Net Sales$500.00100.0%
Cost of Goods Sold($400.00)80.0%
General & Administrative Expenses($52.00)10.4%
Earnings before interest and taxes$48.009.6%
Interest expense($8.00)n.a.
Earnings before taxes$40.00n.a.
Taxes (35%)($14.00)n.a.
Net income$26.00n.a.
Dividends (30%)($7.80)n.a.
Addition to retained earnings$18.20n.a.
Balance Sheet
Cash$10.002.0%
Accounts receivable$85.0017.0%
Inventory$100.0020.0%
Current assets$195.00n.a.
Net fixed assets$150.0030.0%
Total Assets$345.00n.a.
Accounts payable$65.0013.0%
Notes payable (short term debt)$10.00n.a.
Current liabilities$75.00n.a.
Long-term debt$72.00n.a.
Total Liabilities$147.00
Common stock$150.00n.a.
Retained Earnings$48.00n.a.
Total Equity$198.00
Total Liabilities & Owners’ Equity$345.00n.a.