Reference no: EM132276394
Question - Karen Lamont is in the process of starting a new business and wants to forecast the first year's income statement and balance sheet. She has made a number of assumptions, which are shown below:
1. Lamont has projected the firm's sales will be $1 million in the first year.
2. She believes that the operating and gross profit margins will be 20 percent and 50 percent, respectively.
3. For working capital, Lamont has estimated the following:
- Accounts receivable as a percentage of sales: 12%
- Inventory as a percentage of sales: 15%
- Accounts payable as a percentage of sales: 7%
- Accruals as a percentage of sales: 5%
1. A bank has agreed to loan her $300,000, consisting of $100,000 in short-term debt and $200,000 in long-term debt. Both loans will have an 8 percent interest rate.
2. The firm's tax rate will be 30 percent.
3. Lamont will need to purchase $350,000 in plant and equipment.
Lamont will provide any other financing needed.
Question 1 - Based on Lamont's assumptions prepare a pro forma income statement and balance sheet.
Question 2 - If her estimates are correct, what will be the firm's current ratio and debt ratio? Explain the meaning of these ratios.
|
Provide a brief overview of your sustainability initiative
: Explore any local, state, or national revenue sources for sustainable initiatives - outline the cost and benefits associated with the sustainability initiative
|
|
What is the annual interest expense that the company incurs
: The issue date is January 1, 2011 and the maturity date is January 1, 2019. The bonds are issued at par. What is annual interest expense that the company incurs
|
|
State the general conditions for short-run equilibrium
: State the general conditions for short-run equilibrium and for long-run equilibrium. Which one implies the other? Note: "general" means not just.
|
|
Reflect on the overall complexity of criminal justice
: Criminal justice organizations are numerous and operate at all levels of government. They are also complex in nature, both operationally and administratively.
|
|
What will be the firm current ratio and debt ratio
: If her estimates are correct, what will be the firm's current ratio and debt ratio? Explain the meaning of these ratios
|
|
Describe lethal option that are available to law enforcement
: Identify and describe at least 1 new less-than-lethal or nonlethal technology that is currently under development.
|
|
How does the estimate differ if the discount rate is given
: Suppose you are assigned to assess a 50,000-square-foot office building that currently is fully leased at $10 per square foot. The owner's annual costs.
|
|
Determine administration of criminal justice organizations
: Environmental or external factors often influence the management and administration of criminal justice organizations.
|
|
Develop decision-making process in detail
: Scenario: Consider your last big purchase such as a car, appliances, home repairs, home purchase, computer equipment, college tuition, or another "big-ticket".
|