Use the percent sales method to forecast the value

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Reference no: EM132036488

Use the following Income Statement and Balance Sheet of firm X to answers Questions (1) & (2)

Income Statement, 2016		Balance Sheet, 2017
Sales	4,005,000	Assets
Costs except Depr.	-2,995,000	Cash and Equivalents	496,000
EBITDA	1,010,000	Accounts Receivable	660,000
Depreciation	-9,900	Inventories	20,000
EBIT	1,000,100	Total Current Assets	1,176,000
Interest Expense (net)	-40,500	Property Plant & Equipment	1,190,000
Pretax Income	959,600	Total Assets	2,366,000
Income Tax	-335,860	Liabilities &Equity
Net Income	623,740	Accounts Payable	600,000
		Debt	650,000
		Total Liabilities	1,250,000
		Stockholders' Equity	1,116,000
		Total Liabilities and Equity	2,366,000

Sales in 2017 are expected to grow at a rate of 12.5% with respect to the values of 2016. Assume the company pays out 65% of its net income.

QUESTION 1

1. Use the percent sales method to forecast the value of next year's stockholder's equity for firm X.

QUESTION 2

2. Use the percent sales to estimate the firm's net new financing for firm X.

Reference no: EM132036488

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