FINANCE 304 COMPUTER ASSIGNMENT INSTRUCTIONS: You will be allowed to do this project on any spreadsheet software packages. The instructor currently has access to the following packages: (1) Excel (2) Quattro Pro. The use of any other software may be approved by the instructor. PROJECT Doredo Steel Company is a wholesale steel distributor which purchase steel in carload lots and sells to several thousand steel users. The nature of the steel business requires that the company maintain large inventories to take care of customer requirements in the event of mill strikes or other delays. In examining records from 1992 to 2016, the company found consistent relationships among the following accounts as a percent of sales: Current assets Net fixed assets Accounts payable Other current liab. Profit margin 20% 70% if Sales < $53 million 80%, otherwise. 8% 6% 15% The company’s sales for 2017 were $40 million. The company expects to grow by $6 million per year over the next 5 years. The company wants to project its financial requirements for each of the next 5 years, assuming that the projected sales levels are achieved. Assume further that the company pays out 25 percent of earnings as dividends. Construct pro forma balance sheets for the end of each of the next 5 years (from 2018 to 2022), assuming that 20 percent by issuing long-term debt, and 80 percent by selling new common stock. NOTE: You will be expected to unload your file to the Canvas by 10:30 am on November 5th. NAME ____________________ ____________________________________________________________________________________ Doredo Steel Company PRO FORMA Balance Sheet For the Period of 2018-2022 (Thousands of Dollars) ____________________________________________________________________________________ YEAR 2017 2018 2019 2020 2021 2022 Sales 40,000 $0.0 +N5+ +N6+ +N7+ $0.0 Current A 10,000 $0.0 +P8+ +P9+ +P10+ $0.0 Fixed A 26,000 Total 36,000 Acct Payable 5,000 Other cur L 2,500 L/t debt 9,000 Common St 14,000 Retained 5,500 Tot. L&E 36,000 *Interests $120,000 Constant
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