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Additional Funds Needed for ABC Corporation's

The 1999 Balance Sheet for ABC Corporation is shown below:

Assets 1999 Liabilities 1999

Cash $10,000 Accounts Payable $ 8,000
Accounts Receivable 20,000 Accruals 2,000
Inventory 40,000 Total Current Liabilities $10,000
Total Current Assets $70,000 Bonds $30,000
Net Fixed Assets $150,000
Total Liabilities $40,000

Owners Equity

Common Stock $100,000
Retained Earnings 80,000
Total Assets $220,000 Total Liab.& OE $220,000

The firm is currently operating at 100% capacity with sales of $100,000. Management believes that next year sales will increase by 10% and it is anticipating that the firm's profit margin will remain at 20%. The dividend payout for next year will be 45%. In the year 2,000 what will the firm's additional funds needed be? (In answering this question you must prepare a pro forma balance sheet.)

Solution Summary

The solutoin helps in preparing the Pro Forma Balance Sheet and Additional Funds Needed for ABC Corporation's