The following tables contain financial statements for Dynastatics Corporation. Although the company has not been growing, it now plans to expand and will increase net fixed assets (i.e., assets net of depreciation) by $270,000 per year for the next 4 years, and it forecasts that the ratio of revenues to total assets will remain at 1.50. Annual depreciation is 20% of net fixed assets at the beginning of the year. Fixed costs are expected to remain at $70 and variable costs at 70% of revenue. The company’s policy is to pay out one-half of net income as dividends and to maintain a book debt ratio of 20% of total capital. INCOME STATEMENT, 2019 (Figures in $ thousands) Revenue $ 1,800 Fixed costs 70 Variable costs (70% of revenue) 1,260 Depreciation 216 Interest (6% of beginning-of-year debt) 18 Taxable income 236 Taxes (at 35%) 83 Net income $ 153 Dividends $ 77 Addition to retained earnings $ 76 BALANCE SHEET, YEAR-END (Figures in $ thousands) 2019 Assets Net working capital $ 120 Fixed assets 1,080 Total assets $ 1,200 Liabilities and shareholders’ equity Debt $ 300 Equity 900 Total liabilities and shareholders’ equity $ 1,200 Required: a1. Produce an income statement for 2020. Assume that net working capital will equal 50% of fixed assets. a2. Produce a balance sheet for 2020. Assume that net working capital will equal 50% of fixed assets. b. Now assume that the balancing item is debt and that no equity is to be issued. Prepare a completed pro forma balance sheet for 2020. c. Assume that the balancing item is debt and that no equity is to be issued, what is the projected debt ratio for 2022? Complete this question by entering your answers in the tabs below. Req A1 Req A2 Req B Req C Produce an income statement for 2020. Assume that net working capital will equal 50% of fixed assets. (Input all amounts as positive values. Enter your answers in thousands.) Produce an income statement for 2020. Assume that net working capital will equal 50% of fixed assets. (Input all amounts as positive values. Enter your answers in thousands.) I figured this out it is correct but I am lost on th rest please help!!! Pro-Forma Income Statement 2020 Revenue $2,250 Variable costs 1,575 Fixed costs 70 Depreciation 216 Interest 18 Taxable income 371 Taxes 130 Net income $241 Dividends $121 Retained earnings $120 Produce an balance sheet for 2020. Assume that net working capital will equal 50% of fixed assets. (Enter your answers in thousands.) Balance Sheet Year-End 2020 Assets Net working capital Fixed assets Total assets Liabilities & Shareholders’ Equity Debt Equity Total liabilities & shareholders’ equity Now assume that the balancing item is debt and that no equity is to be issued. Prepare a completed pro forma balance sheet for 2020. (Enter your answers in thousands.) Balance Sheet Year-End 2020 Assets Net working capital Fixed assets Total assets Liabilities & Shareholders’ Equity Debt Equity Total liabilities & shareholders’ equity What is the projected debt ratio for 2022? (Round your answer to 3 decimal places.) Debt ratio

The following tables contain financial statements for Dynastatics Corporation. Although the company has not been growing, it now plans to expand and will increase net fixed assets (i.e., assets net of depreciation) by $270,000 per year for the next 4 years, and it forecasts that the ratio of revenues to total assets will remain at 1.50. Annual depreciation is 20% of net fixed assets at the beginning of the year. Fixed costs are expected to remain at $70 and variable costs at 70% of revenue. The company’s policy is to pay out one-half of net income as dividends and to maintain a book debt ratio of 20% of total capital. INCOME STATEMENT, 2019 (Figures in $ thousands) Revenue $ 1,800 Fixed costs 70 Variable costs (70% of revenue) 1,260 Depreciation 216 Interest (6% of beginning-of-year debt) 18 Taxable income 236 Taxes (at 35%) 83 Net income $ 153 Dividends $ 77 Addition to retained earnings $ 76 BALANCE SHEET, YEAR-END (Figures in $ thousands) 2019 Assets Net working capital $ 120 Fixed assets 1,080 Total assets $ 1,200 Liabilities and shareholders’ equity Debt $ 300 Equity 900 Total liabilities and shareholders’ equity $ 1,200 Required: a1. Produce an income statement for 2020. Assume that net working capital will equal 50% of fixed assets. a2. Produce a balance sheet for 2020. Assume that net working capital will equal 50% of fixed assets. b. Now assume that the balancing item is debt and that no equity is to be issued. Prepare a completed pro forma balance sheet for 2020. c. Assume that the balancing item is debt and that no equity is to be issued, what is the projected debt ratio for 2022? Complete this question by entering your answers in the tabs below. Req A1 Req A2 Req B Req C Produce an income statement for 2020. Assume that net working capital will equal 50% of fixed assets. (Input all amounts as positive values. Enter your answers in thousands.) Produce an income statement for 2020. Assume that net working capital will equal 50% of fixed assets. (Input all amounts as positive values. Enter your answers in thousands.) I figured this out it is correct but I am lost on th rest please help!!! Pro-Forma Income Statement 2020 Revenue $2,250 Variable costs 1,575 Fixed costs 70 Depreciation 216 Interest 18 Taxable income 371 Taxes 130 Net income $241 Dividends $121 Retained earnings $120 Produce an balance sheet for 2020. Assume that net working capital will equal 50% of fixed assets. (Enter your answers in thousands.) Balance Sheet Year-End 2020 Assets Net working capital Fixed assets Total assets Liabilities & Shareholders’ Equity Debt Equity Total liabilities & shareholders’ equity Now assume that the balancing item is debt and that no equity is to be issued. Prepare a completed pro forma balance sheet for 2020. (Enter your answers in thousands.) Balance Sheet Year-End 2020 Assets Net working capital Fixed assets Total assets Liabilities & Shareholders’ Equity Debt Equity Total liabilities & shareholders’ equity What is the projected debt ratio for 2022? (Round your answer to 3 decimal places.) Debt ratio

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 20P

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Related questions

Question

INCOME STATEMENT, 2019 (Figures in $ thousands)
Revenue			$	1,800
Fixed costs				70
Variable costs (70% of revenue)				1,260
Depreciation				216
Interest (6% of beginning-of-year debt)				18
Taxable income				236
Taxes (at 35%)				83
Net income			$	153
Dividends	$	77
Addition to retained earnings	$	76

BALANCE SHEET, YEAR-END (Figures in $ thousands)
	2019
Assets
Net working capital	$	120
Fixed assets		1,080
Total assets	$	1,200
Liabilities and shareholders’ equity
Debt	$	300
Equity		900
Total liabilities and shareholders’ equity	$	1,200

Required:

a1. Produce an income statement for 2020. Assume that net working capital will equal 50% of fixed assets.

a2. Produce a balance sheet for 2020. Assume that net working capital will equal 50% of fixed assets.

b. Now assume that the balancing item is debt and that no equity is to be issued. Prepare a completed pro forma balance sheet for 2020.

c. Assume that the balancing item is debt and that no equity is to be issued, what is the projected debt ratio for 2022?

Complete this question by entering your answers in the tabs below.

Req A1
Req A2
Req B
Req C

Produce an income statement for 2020. Assume that net working capital will equal 50% of fixed assets. (Input all amounts as positive values. Enter your answers in thousands.)

I figured this out it is correct but I am lost on th rest please help!!!

Pro-Forma Income Statement
2020
Revenue	$2,250
Variable costs	1,575
Fixed costs	70
Depreciation	216
Interest	18
Taxable income	371
Taxes	130
Net income	$241
Dividends	$121
Retained earnings	$120

Produce an balance sheet for 2020. Assume that net working capital will equal 50% of fixed assets. (Enter your answers in thousands.)

Balance Sheet
Year-End 2020
Assets
Net working capital
Fixed assets
Total assets
Liabilities & Shareholders’ Equity
Debt
Equity
Total liabilities & shareholders’ equity

Now assume that the balancing item is debt and that no equity is to be issued. Prepare a completed pro forma balance sheet for 2020. (Enter your answers in thousands.)

Balance Sheet
Year-End 2020
Assets
Net working capital
Fixed assets
Total assets
Liabilities & Shareholders’ Equity
Debt
Equity
Total liabilities & shareholders’ equity

What is the projected debt ratio for 2022? (Round your answer to 3 decimal places.)

Debt ratio

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