Question

Use the following Income Statement and Balance Sheet of firm X to answers Questions (1) &...

Use the following Income Statement and Balance Sheet of firm X to answers Questions (1) & (2)

Income Statement, 2016

Balance Sheet, 2016

Sales

5,000,000

Assets

Costs except Depr.

-3,500,000

Cash and Equivalents

1,096,000

EBITDA

1,500,000

Accounts Receivable

960,000

Depreciation

-10,900

Inventories

90,000

EBIT

1,489,100

Total Current Assets

2,146,000

Interest Expense (net)

-100,500

Property Plant & Equipment

2,190,000

Pretax Income

1,388,600

Total Assets

4,336,000

Income Tax

-486,010

Liabilities &Equity

Net Income

902,590

Accounts Payable

900,000

Debt

950,000

Total Liabilities

1,850,000

Stockholders' Equity

2,486,000

Total Liabilities and Equity

4,336,000

Sales in 2017 are expected to grow at a rate of 9% with respect to the values of 2016. Assume the company pays out 55% of its net income.

1. Use the percent sales method to forecast the value of next year's stockholder's equity for firm X.

2. Use the percent sales to estimate the firm s net new financing for firm X.

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