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    Proformaquestionspart 1

    Uploaded by

    Kevser Bozoğlu
    This document contains 5 proforma questions about calculating external financing needed (EFN) for companies based on their financial statements and assumptions about future sales growth and capacity usage. Question 1 asks to calculate EFN for Skandia Mining Company assuming 10% sales growth at full capacity. Question 2 asks to calculate EFN for Skandia Mining at 60% and 95% capacity usage. Question 3 asks about Skandia Mining's internal and sustainable growth rates. Question 4 asks to calculate EFN for Williams & Sons assuming 16% sales growth at full capacity. Question 5 asks about Williams & Sons' maximum internal and sustainable growth rates while maintaining debt ratios.

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    Proformaquestionspart 1

    Uploaded by

    Kevser Bozoğlu
    26 views3 pages
    This document contains 5 proforma questions about calculating external financing needed (EFN) for companies based on their financial statements and assumptions about future sales growth and capacity usage. Question 1 asks to calculate EFN for Skandia Mining Company assuming 10% sales growth at full capacity. Question 2 asks to calculate EFN for Skandia Mining at 60% and 95% capacity usage. Question 3 asks about Skandia Mining's internal and sustainable growth rates. Question 4 asks to calculate EFN for Williams & Sons assuming 16% sales growth at full capacity. Question 5 asks about Williams & Sons' maximum internal and sustainable growth rates while maintaining debt ratios.

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    Proformaquestionspart1

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    This document contains 5 proforma questions about calculating external financing needed (EFN) for companies based on their financial statements and assumptions about future sales growth and capacity usage. Question 1 asks to calculate EFN for Skandia Mining Company assuming 10% sales growth at full capacity. Question 2 asks to calculate EFN for Skandia Mining at 60% and 95% capacity usage. Question 3 asks about Skandia Mining's internal and sustainable growth rates. Question 4 asks to calculate EFN for Williams & Sons assuming 16% sales growth at full capacity. Question 5 asks about Williams & Sons' maximum internal and sustainable growth rates while maintaining debt ratios.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    26 views3 pages

    Proformaquestionspart 1

    Uploaded by

    Kevser Bozoğlu
    This document contains 5 proforma questions about calculating external financing needed (EFN) for companies based on their financial statements and assumptions about future sales growth and capacity usage. Question 1 asks to calculate EFN for Skandia Mining Company assuming 10% sales growth at full capacity. Question 2 asks to calculate EFN for Skandia Mining at 60% and 95% capacity usage. Question 3 asks about Skandia Mining's internal and sustainable growth rates. Question 4 asks to calculate EFN for Williams & Sons assuming 16% sales growth at full capacity. Question 5 asks about Williams & Sons' maximum internal and sustainable growth rates while maintaining debt ratios.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    Proforma Questions

    1. Based on the following information for the Skandia Mining Company, what is EFN if
    sales are predicted to grow by 10%? Use the percentage of sales approach and
    assume the company is operating at full capacity. The payout ratio is constant.
    $78.61
    Skandia Mining Company Financial Statements
    Income Statement Balance Sheet
    Assets Liabilities and Owners' Equity
    Curren
    t
    Sales $4,250.00 Assets $900.00 Current Liabilities $500.00
    Net
    ($3,875.00 Fixed $2,200.0 $1,800.0
    Costs ) Assets   0 Long-term debt 0
    Taxable Income $375.00 Owners' Equity $800.00
    Taxes (34%) ($127.50)
    Total $3,100.0 Total liabilities and owners' $3,100.0
    Net Income $247.50 Assets 0 equity 0
    -Dividends ($82.60)
    Addition to retained
    earnings $164.90

    2. Based on the information in Problem 1, what is EFN, assuming 60% capacity usage
    for net fixed assets? Assuming 95% capacity? -$141.39 and -$42.39

    3. Based on the information in Problem 1, what growth rate can Skandia maintain if no
    external funding is used (internal growth rate)? What is the sustainable growth rate?
    5.62% and 25.99%

    4. Based on following financial statements for Williams& Sons, calculate the External
    Financing Needed (EFN) given that firm expects sales to grow by %16 and currently
    company is operating at full capacity. Assume that cost of goods sold, operational
    expenses, assets and current liabilities are directly proportional to sales, rent
    expense and interest expense are fixed. Williams& Sons is willing to keep their
    plowback ratio constant. $45,544

    Income Statement (in thousands)

    Sales Revenue $35,500


    Cost of Goods Sold ($22,720)
    Gross Profit $12,780
    Operational Expenses ($9,940)
    Rent Expense ($950)
    EBIT $1890
    Interest Expense ($550)
    EBT $1340
    Tax Expense ($402)

    Net Income $938


    Dividends ($281.4)
    Add. to Retained
    Earnings $656.6

    Balance Sheet (in thousands)

    Assets Liabilities and Stockholders’ Equity

    Current Assets $1270 Current Liabilities $940

    Fixed Assets $5450 Long-Term Debt $3150

    Total Assets $6720 Total Liabilities $4090

    Stockholders’ Equity $2630


    Total Liabilities and
    Stockholders’ Equity $6720

    5. Calculate maximum growth rate that can be achieved by using retained earnings as
    only source of financing for Williams& Sons. Calculate the maximum growth rate that
    maintains debt ratio constant. Internal GR = 15.98%, Sustainable GR = 33.27%
    3

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