Problem Set on Financial Planning and Forecasting 1. Last years balance sheet
Problem Set on Financial Planning and Forecasting
1. Last years balance sheet and income statement for the Lewis Company are shown below. The firm operated at full capacity. It expects sales to increase by 20 percent during this year and expects this years dividends per share to increase to $1.10.
a. Use percent of sales method (i.e., constant ratio method) to determine how much outside financing is required, developing the firms pro forma balance sheet and income statement, and use the AFN as the balancing item.
b.If the firm must maintain a current ratio of 2.3 and a debt ratio of 40 percent, how much financing will be obtained using notes payable, long-term debt, and common stock?
Net fixed assets3,200
Total assets 4,240
Total liabilities and equity4,240
Taxes @ 400
Per Share Data
Earnings per share (EPS)1.60
Dividends per share (DPS)1.04
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