Financial Forecasting Problems
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Gainesville Surgicenter Inc. is a large, ambulatory surgery center owned by a group practice of surgeons in Gainesville, Florida. The 2006 financial statements for the firm are shown below:
(***see attached excel file***)
a. Assume that the company was operating at full capacity in 2006 with regard to all items except fixed assets (operating rooms and support space); fixed assets in 2006 were utilized to only 75 percent of capacity. By what percentage could 2007 revenues increase over 2006 revenues without the need for an increase in fixed assets?
b. Now suppose 2007 revenues increase by 25 percent over 2006 revenues. Use the constant growth method to develop a pro forma balance sheet and income statement as in Table 14.3. Assume that Gainesville cannot sell any fixed assets and that any financing required is borrowed as notes payable at an interest rate of 12 percent.
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Solution Summary
This solution helps answer financial forecasting problems. The solution is given in an Excel file.
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