Ma & Pa Kettle's Chili Company have started up a business selling their new chili recipe and they want you to help them with next year's sales forecast. Using the worksheet below, complete Ma & Pa's financial forecast and answer the questions which follow.
To begin with, Ma & Pa are sure sales will grow 50% next year. Assume that is true. Then assume that COGS, Current Assets, and Current Liabilities all vary directly with Sales. Assume that fixed expenses will remain unchanged and that $1,000 worth of new Fixed Assets will be obtained next year. Lastly, the current dividend policy will be continued next year.
Ma & Pa Kettle Chili Company, Inc.
Financial Status and Forecast for 2009
2008 Est for 2009
Sales $10,000 ________
COGS 4,000 ________
Gross Profit 6,000 ________
Fixed Expenses 3,000 ________
Before Tax Profit 3,000 ________
Tax @ 33.3333% 1,000 ________
Net Profit $2,000 ________
Dividends $0 ________
Current Assets $25,000 ________
Net Fixed Assets 15,000 ________
Total Assets $40,000 ________
Current Liabilities $17,000 ________
Long term debt 3,000 ________
Common Stock 7,000 ________
Retained Earnings 13,000 ________
Total Liabs & Eq $40,000 ________
Will Ma & Pa be able to get by without any External Funding Required in 2009? .
If not, how much will they need? $________.
*Please see the attached file for the calculations*.
Will Ma & Pa ...
The solution explains how to prepare proforma statements and calculate the external funds needed