2003 2003 500 BALANCE SHEET Cash (2%) Receivables (17%) INCOME STATEMENT Sales Cost of Goods Sold (80%) Gross profit (S- COGS) S&GA (10.4% Operating Profit (EBIT) Interest Expense* Profit before taxes Taxes (40 X 40/100 = 16). Net Profit Inventory (20%) Fixed Assets (30%) Total Assets 72 Accounts Pavable (8%) Accrued Wages (79%) LT Debt* Common Stock* Retained Earnings* Total Liabilities and Equity 150 48 EXAMPLES Example 1: Projectors, Inc., believes that sales will rise 25 percent in 2004. Projectors was operating at full capacity in 2003, and it pays no dividends to shareholders. Projectors' 2003 financial statements are shown in Figure 7. In parentheses next to each account is the historical percentage of sales for that account. The interest rate on Projectors' long-term debt is 11.11 percent, and their tax rate is 40 percent. Using the percentage of sales method, forecast the additional financing requirements that Projectors will need to support this level of sales growth
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