Use the information provided in Table 6.1 to complete the pro forma in

Use the information provided in Table 6.1 to complete the pro forma income statement and balance sheet for J. W. Bracken Inc.

What will be an ideal response?

ANSWER

Table 6.1 Answers
Assumptions: ($000’s)
Current Sales $136.36
Growth Rate in Sales 10.0%
Gross Profit (% of Sales) 36.0%
SGA Expenses (% of Sales) 18.0%
Depreciation (% of Beginning Fixed Assets) 20.0%
Interest Expenses (% of Current Loan) 10.0%
Tax Rate 40.0%
Dividends (% of Net Earnings) 40.0%
Current Loans $27.0
Beginning Fixed Assets $33.0
No New External Equity
Pro forma age of accounts receivable (days) 38.6

J W Bracken Pro Forma Income Statement ($000’s) Year 1 Pro Forma
Sales $150.0
CGS $96.0
Gross Profit $54.0
SGA Expenses $27.0
Depreciation $6.6
EBIT $20.4
Interest $2.7
EBT $17.7
Taxes $7.1
Net Earnings (NE) $10.6

Dividends $4.2
Change in Retained Earnings $6.4

J W Bracken Balance Sheets ($000’s) Year 0 Year 1 Pro Forma
Assets
Cash $8.0 $8.6 Given
Accounts Receivable $12.0 $15.9
Inventory $22.0 $24.6 Given
Total Current Assets $42.0 $49.1

Fixed Assets $33.0 $34.5 Given
Total Assets $75.0 $83.6

liabilities
Accounts Payable $14.0 $14.8 Given
Long-Term Debt $27.0 $28.4
Total liabilities $41.0 $43.2

Equity $34.0 $40.4
Total liabilities and Equity $75.0 $83.6