Consider the following simplified financial statements for the Fire Corporation

Question

Consider the following simplified financial statements for the Fire Corporation (assuming no income taxes):

The company has predicted a sales increase of 6 percent. Assume Fire pays out half of net income in the form of a cash dividend. Costs and assets vary with sales, but debt and equity do not.

Prepare the pro forma statements. (Round your answers to the nearest whole dollar amount.)

Determine the external financing needed. (Negative amount should be indicated by a minus sign.)

Consider the following simplified financial statements for the Fire Corporation (assuming no income taxes):

Explanation / Answer

No external financing needed

Pro forma income statement Pro forma balance sheet   Sales $ 48,442 $ Assets $25,099 Debt $5,900   Costs $ 42,907 Equity $16,000   Net income $ 5,535 $ Total $25,099 $ Total $21,900

No external financing needed

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