Question

Consider the following simplified financial statements for the Wims Corporation (assuming no income taxes):

The company has predicted a sales increase of 15 percent. Assume Wims pays out half of net income in the form of a cash dividend. Costs and assets vary with sales, but debt and equity do not.

Prepare the pro forma statements. (Input all amounts as positive values. Do not round intermediate calculations.)

Determine the external financing needed. (Do not round intermediate calculations. A negative answer should be indicated by a minus sign.)

Consider the following simplified financial statements for the Wims Corporation (assuming no income taxes): Income Statement Sales $38,000 Assets $27,300 Debt$ 6,700 Balance Sheet Costs 32,600 Equity 20,600 Net inconte $ 5,400 Total $27,300 Total $27300 The company has predicted a sales increase of 15 percent. Assume Wims pays out half of net income in the form of a cash dividend. Costs and assets vary with sales, but debt and equity do not Prepare the pro forma statements. (Input all amounts as positive values. Do not round intermediate calculations.) Pro forma income statement Pro forma balance sheet Sales Costs Net income Debt Equity Assets Total Determine the external financing needed. (Do not round intermediate Iculations. A negative answer should be indicated by a minus sign.) External financing needed

Answer 1

Calculate the external financing needed as follows:

Formulas: