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FIN 200 wk 3 Pro Forma Statements

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LANDIS CORPORATION
Sales .15 $100 million =15 million
Spontaneous assets 5% 15% 25% 40% 85%
Spontaneous liabilities 15% 10% 25%
= ×
= + + + =
= + =
a.
( ) ( ) ( )
( ) ( ) ( ) ( )
2
A L
RNF= S S PS 1 d
S S
.85 $15million .25 $15 million .06 $115 1 .5
$12.75million $3.75million $3.45million
= $5.55 million
=
=
b. If Landis reduces the payout ratio, the company will
retain more earnings and need less external funds. A
slower growth rate means that less assets will have to
be financed and in this case, less external funds would
be needed. A declining profit margin will lower retained
earnings and force Landis Corporation to seek more
external funds.
c. Balance Sheet—December 31, 2009
(Dollars in Millions)
Cash................. $ 5.75 Accounts Payable..... $17.25
Accounts Receivable. . 17.25 Accruals............. 11.50
Inventory............ 28.75 Notes Payable........ 17.55
1
Net Fixed Assets..... 46.00 Long-Term Bonds...... 5.00
Common Stock......... 10.00
_____ Retained Earnings.... 36.45
2
$97.75 $97.75
1
Original notes payable plus required new funds. This is
the plug figure.
2
2009 retained earnings (beginning of 2009) + PS
2
(1-D) or
$33 mil + $3.45 mil
Amount in millions
Cash = 115 million X .05 = 5.75
Account Receivable 115 million X .15 = 17.25
Inventory 115 million X .25 = 28.75
Net Fixed Assets = 115 million X .40 = 46.00

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LANDIS CORPORATION a. b. If Landis reduces the payout ratio, the company will retain more earnings and need less external funds. A slower growth rate means that less assets will have to be financed and in this case, less external funds would be needed. A declining profit margin will lower retained earnings and force Landis Corporation to seek more external funds. c. Balance Sheet-December 31, 2009 (Dollars in Millions) Cash $ 5.75 Accounts Payable $17.25 Accounts Receivable 17.25 Accruals 11.50 Inventory 28.75 Notes Payable 17.551 Net Fixed Assets 46.00 Long-Term Bonds 5.00 Commo ...
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