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On page 347 of our text, you will find financial statements for Munich Exports Corporation. 1. Build a proforma income statement, budget, for 2017, 2018, and 2019. Assume the same percentage of growth in sales the firm experienced in 2016 continues in following years (round growth to even percentages without decimals). Assume COGS as a percentage of sales from 2016 continues constant in following years. Assume that after 2016, marketing costs increase by 5% annually. Assume general and administrative, depreciation, and interest costs from 2016 remain the same in following years. The tax rate will not change, It is not necessary to project dividends. Follow the assumptions stated above, not those stated in the book. 2. For each of your annual budgets (2017, 2018, and 2019), calculate net income as a percentage of sales. 3. For 2017 through 2019, does net income as a percentage of sales increase? Why or why not? MUNICH EXPORTS CORPORATION BALANCE SHEETS 2015 2016 Cash Accounts receivable Inventories Total current assets Fixed assets, net Total assets $ 50.000 200.000 450.000 700,000 300,000 $1.000.000 $ 50.000 300.000 570,000 920,000 380,000 $1,300.000 Accounts payable Accruals Bank loan Total current liabilities Long-term debt Common stock ($0.05 par) Additional paid-in-capital Retained earnings Total liabilities and equity $ 130,000 50.000 90,000 270.000 400,000 50,000 200,000 80,000 $1,000,000 $ 180,000 70,000 90,000 340.000 550.000 50.000 200,000 160.000 $1,300,000 INCOME STATEMENTS Net sales Cost of goods sold Gross profit Marketing General and administrative Depreciation EBIT Interest Earnings before taxes Income taxes (40% rate) Net income Cash dividends Added Retained Earnings 2015 $1,300,000 780,000 520,000 130,000 150,000 40,000 $ 200,000 45,000 155,000 62,000 $ 93.000 $ 37.000 56,000 2016 $1,600,000 960,000 640.000 160,000 150,000 55.000 $ 275.000 55.000 220.000 88.000 $ 132,000 $ 52,000 70.000