Finance Homework2 – Attn: Prof-Hayat


This is for Prof-Hayat to work on. 🙂


Save your time - order a paper!

Get your paper written from scratch within the tight deadline. Our service is a reliable solution to all your troubles. Place an order on any task and we will take care of it. You won’t have to worry about the quality and deadlines

Order Paper Now
A firm with sales of $5,000 has the following balance sheet:  
Assets, Liabilities and Equity as of xx/xx/xx
Assets Liabilities and Equity
Accounts receivable $1,300 Accounts payable $1,200
Inventory 1,600 Long-term debt 2,500
Plant 1,700 Equity 900
Total $4,600 Total $4,600
The firm earns 20 percent on sales and expects those sales to rise to $5,500. The increased sales may 
require additional financing. Accounts receivable and inventory will increase, and trade accounts will 
also spontaneously increase with the increase in sales. Management expects to distribute 75% of earnings.
a. Determine the new balance sheet entries for those assets and liabilities that spontaneously change with thesuch as 22% or .22.
level of sales using the percent of sales technique. (Accounts receivable, inventory, and accounts payable vary with sales; the 
other entries do not). Round off to nearest percentage point,   
b. Will the firm need external financing to achieve sales of $5,500?  
c. Construct the pro forma balance sheet for sales of $5,500. Any new financing should be obtained by issuing new long‑term
debt. Any excess funds should be held in cash.    
Given the following information:    
June $200,000    
July 200,000    
August 200,000    
September 300,000    
October 500,000    
November 200,000    
 – 2. 70% of the sales are for credit and are collected one month after the sale. Other receipts:  $50,000 in October
 – Variable disbursements: 60% of sales each month  
 – Other disbursements: $10,000 a month    
 – $80,000 for taxes in August      
 – $400,000 for debt repayment in November    
 – Beginning cash: $50,000      
 – Desired cash: $10,000      
Prepare a monthly cash budget for this firm.    

"Our Prices Start at $11.99. As Our First Client, Use Coupon Code GET15 to claim 15% Discount This Month!!":

Get started