Question

The Eagle Feather Fabric Company expects to complete the current year with the financial results given below.

Forecast next year using a modified percentage of sales method assuming no dividends are paid and no new stock is sold along with the following:

1. A 17% growth in sales and a 40% growth in net fixed assets.
2. A 15% growth in sales with a 10% growth in expenses and a 20% growth in net fixed assets. (Note that negative debt means the business will generate more cash than is currently owed.)

Enter your answers in thousands. For example, an answer of $12 thousands should be entered as 12, not 12,000. Round your answer to the nearest thousand. Enter all amounts as a positive number.

INCOME STATEMENT ($000)
		Current Year		Next Year
				a.		b.
	Revenue	$36,100		$		$
	COGS	14,440
	Gross Margin	$21,660		$		$
	Expenses	12,635
	EBIT	$9,025		$		$
	Interest (11%)	625
	EBT	$8,400		$		$
	Tax (42%)	3,528
	Net Income	$4,872		$		$
BALANCE SHEET ($000)
Assets
	Cash	$1,000		$		$
	Accounts receivable	5,000
	Inventory	2,888
	Current assets	$8,888		$		$
	Net fixed assets	7,250
	Total Assets	$16,138		$		$
Liabilities & equity
	Accounts payable	$1,550		$		$
	Accruals	530
	Current liabilities	$2,080		$		$
	Debt	5,598
	Equity	8,460
	Total L&E	$16,138		$		$

Answer 1

Refer the following computations :