Computation of proforma value of common stock
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A Company's sales are predicted to increase by 6% plus 1.5 times the expected change in GDP. Also, current assets, fixed assets, current liabilities, and net profit are related to sales by the following relationships.
CA = $25,000 + .15 Sales
FA = $50,000 + .40 Sales
CL = $5,000 + .05 Sales
NP = .05 Sales
Last year's balance sheet is shown below. Sales were $500,000 and the firm's dividend payout ratio is 20%. GDP is predicted to increase by 4%. I need a little help calculating a pro forma balance sheet. Also, what is the pro forma value for common stock?
Company A Balance Sheet
Net working capital - 100,000
Fixed assets - $150,000
Total - $250,000
Current liabilities - 30,000
Long term debt - 70,000
Common stock - 100,000
Retained earnings $ 50,000
Total - $250,000
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