Question

The CFO of Garden Equipment Ltd., has created the firm s pro forma balance sheet for the next fiscal year. Sales are projected to grow by 10 percent to $440 million. Current assets, fixed assets, and short-term debt are 25 percent, 60 percent, and 20 percent of sales, respectively. Garden Equipment pays out 35 percent of its net income in dividends. The company currently has $150 million of long-term debt and $100 million in common stock par value. The profit margin is 8 percent. Based on the CFO s sales growth forecast, how much does Garden Equipment need in external funds for the upcoming fiscal year? (Hint: you need to construct the balance sheet this year and determine the accumulated retained earnings before constructing the proforma balance sheets to determine the EFN)

		$12,200.00
		$2,016.00
		$3,120.00
		$5,465.00
		$8,759.00

Answer 1