# FIN 200 wk 5 Alternative Financing Plans (1)

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Balance Sheet and Forecasting CalculationsFIN 200Axia College of University 1 a. Pro Forma Balance Sheet as of Dec. 31, 2006 Assets LiabilitiesCash \$300,000 Accounts Payable \$900,000Accounts Receivable600,000 Notes Payable 1,000,000 Inventories 1,800,000 Long-term Debt 200,000Fixed Assets, net 750,000 Stockholders' Equity 1,350,000 Total Assets \$3,450,000 Total Liabilities and Stockholders' Eq.\$3,450,000So the additional financing needed is the difference between the projected Notes Payable above and last year's Notes Payable: \$1,000,000 - \$500,000 = \$500,000Note: Cash = 5% of salesAccounts receivable = 10% of salesInventories = 30% of salesFixed assets, net = 12.5% of salesAccounts payable = 15% of salesAddition to retained earnings in 2006 = 2006 net income - dividends paid in 2006 = \$400,000 - \$50,000 = \$350,000 Alternatively, we can solve for the additional financing needed using equation (5.3):AdditionalFinancing = [(A/S)(DS) - (CL/S)(DS)] - [NI - D]NeededA = \$2,300,000 S = \$4,000,000 DS = \$2,000,000D = \$50,000 NI = \$400,000 CL = \$600,000 = [(2,300,000/4,000,000)(2,000,000) -

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