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Total Owners’
Equity
$13,434,000
Total Liab/OE
$26,079,000
Transfer this balance sheet to an Excel spreadsheet and begin to prepare a Pro Forma
Balance Sheet for 2016 based on the following information:
2. Cash will increase to $2,825,000 and accounts receivable will increase by 15%.
The inventories will go up 35% and P, P, &E will go up $2,000,000 with an expansion to
the plant. Long term debt will increase to $2,000,000 to help finance the plant expansion
and add $1,137,150 to other LT debt.. You will now have balance sheets for 2015 and
2016 for ICS Manufacturing.
Using the 2015 and 2016 financials for ICS, complete the following – show calculations
and/or numbers you used to derive your answer:
3. ICS wants to take around $400,000 of its cash and invest in marketable securities.
They anticipate receiving around $7.5% interest on their investment and would like to
have it held for 10 years. What will be the FV of this $400,000 investment?
4. ICS believes they will only gain a 6% return on their $400,000 investment. Using
the Rule of 72, how many years will it take to double their investment?
5. ICS plans on expanding their plant and will fund $2,000,000. Part of the funding
will come from cash, but the balance of $775,000 will be financed. The interest rate will
be 5% and ICS plans on borrowing the funds for 4 years. Prepare a loan amortization
schedule for the 4 years with 5% interest for the $775,000 and assume making one
payment per year. Show the schedule.
6. Using your 2015/2016 Income Statement and Balance Sheet, add a column for
percentage of total. Compute the percentages for each line item for the financial
statements. For the 2015 Income Statement, what is the percentage of COGS as
compared to total sales? Is this figure reasonable and what is COGS and why is it
important to a company?
7. Financial Ratios provide information to analyze a company’s performance. Solve
the following ratios for 2015 and 2016 using the Income Statement and Balance sheets
you prepared for ICS Manufacturing.
a.
b.
Current Ratio – current assets/current liabilities
Quick Ratio – (current assets – inventories)/current liabilities