Build the statement using the data and assumptions

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Hill Propane Distributors wants to construct a pro forma balance sheet for 2010. Build the statement using the following data and assumptions:

1. Projected sales for 2010 are $35 million.

2. Hill's gross profit margin is 35 percent.

3. Operating expenses average 10 percent of sales.

4. Depreciation expense last year was $5 million.

5. Hill faces a tax rate of 35 percent.

6. Hill distributes 20 percent of its net income to shareholders as a dividend.

7. Hill wants to maintain a minimum cash balance of $3 million.

8. Accounts receivable equal 8.5 percent of sales.

9. Inventory averages 10 percent of cost of goods sold.

10. Last year's balance sheet lists net fixed assets of $30 million. All these assets are depreciated on a straight-line basis, and none of them will be fully depreciated for at least three years.

11. Hill plans to invest an additional $1 million in fixed assets that it will depreciate over a five-year life on a straight-line basis.

12. In 2009, Hill reported common stock and retained earnings of $20 million.

13. Accounts payable averages 9 percent of sales. Will Hill Propane's cash balance at the end of 2010 exceed its minimum requirement of $3 million?

Reference no: EM131316949

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