55. Vinny’s Pizza has just come out with a new pizza that Joe is sure will cause sales to double between 2015 and 2016. Using the following worksheet, complete Vinny’s pro forma financial forecast and answer the related questions.
You may assume that COGS, current assets, and current liabilities will maintain the same percentage of sales as in 2015. Furthermore, you may assume that no new fixed assets will be needed in 2016, and the current dividend policy will be continued in 2016. Will Joe be able to get by without any additional funds needed in 2016? If not, how much will he need?
Vinny’s Pizza, Inc.
Financial Status and Forecast
2015 |
Estimate for 2016 |
|
Sales |
$ 10,000 |
|
COGS |
4,000 |
|
Gross Profit |
6,000 |
|
Fixed Expenses |
3,000 |
|
Before-Tax Profit |
3,000 |
|
Tax @ 33.33% |
1,000 |
|
Net Profit |
$ 2,000 |
|
Dividends |
$ 0 |
|
Current Assets |
$ 25,000 |
|
Net Fixed Assets |
15,000 |
|
Total Assets |
$ 40,000 |
|
Current Liabilities |
$ 17,000 |
|
Long-Term Debt |
3,000 |
|
Common Stock |
7,000 |
|
Retained Earnings |
13,000 |
|
Total Liabilities and Equity |
$ 40,000 |
|
Additional Fund needed (AFN)= |
COGS = 4000/10000= .40 OR 40%
CUrrent asset = 25000/10000 = 2.5 or 250%
current liabilities= 17000/10000=1.7 or 170%
2016 | |
sales | 10000*2=20000 |
COGS | (8000) |
Gross profit | 12000 |
Fixed expense | (3000) |
Before tax profit | 9000 |
Tax | (2999.7) [9000*33.33%] |
Net profit | 6000.3 |
Dividend | 0 |
current asset | 50000 [20000*2.5] |
net fixed asset | 15000 |
Total asset | 65000 |
current liabilities | 34000 [20000*1.7] |
long term debt | 3000 |
common stock | 7000 |
Retained earning | 13000+6000.3= 19000.3 |
Total Liabilities and Equity | 63000.3 |
Additional Fund needed (AFN) | 1999.7 [65000-63000.3] |
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