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 depreciation) by $270,000 per year for the next 4 years, and it forecasts that the ratio of revenues to total assets will remain at 1.50. Annual depreciation is 20
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 | 70 | |||||
Variable costs (70% of revenue) | 1,260 | |||||
Depreciation | 216 | |||||
Interest (6% of beginning-of-year debt) | 18 | |||||
Taxable income | 236 | |||||
Taxes (at 35%) | 83 | |||||
Net income | $ | 153 | ||||
Dividends | $ | 77 | ||||
Addition to |
$ | 76 | ||||
(Figures in $ thousands) |
|||
2019 | |||
Assets | |||
Net |
$ | 120 | |
Fixed assets | 1,080 | ||
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 2022?
Complete this question by entering your answers in the tabs below.
- Req A1
- Req A2
- Req B
- Req C
Produce an income statement for 2020. Assume that net working capital will equal 50% of fixed assets. (Input all amounts as positive values. Enter your answers in thousands.)
|
|
Produce an balance sheet for 2020. Assume that net working capital will equal 50% of fixed assets. (Enter your answers in thousands.)
|
|
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. (Enter your answers in thousands.)
|
|
What is the projected debt ratio for 2022? (Round your answer to 3 decimal places.)
|
|
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 2 images