Question

55. Vinny’s Pizza has just come out with a new pizza that Joe is sure will...

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)=

Homework Answers

Answer #1

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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