Question

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.

Answer 1