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Ma & Pa Kettle’s Chili Company have started up a business selling their new chili recipe and they want you to help them with next year’s sales forecast. Using the worksheet below, complete Ma & Pa’s financial forecast and answer the questions which follow.
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To begin with, Ma & Pa are sure sales will grow 50% next year. Assume that is true. Then assume that COGS, Current Assets, and Current Liabilities all vary directly with Sales. Assume that fixed expenses will remain unchanged and that $1,000 worth of new Fixed Assets will be obtained next year. Lastly, the current dividend policy will be continued next year.
Ma & Pa Kettle Chili Company, Inc.
Financial Status and Forecast for 2009
2008 Est for 2009
Sales $10,000
COGS 4,000
Gross Profit 6,000
Fixed Expenses 3,000
Before Tax Profit 3,000
Tax @ 33.3333% 1,000
Net Profit $2,000 __
Dividends $0 __
Current Assets $25,000
Net Fixed Assets 15,000
Total Assets $40,000 __
Current Liabilities $17,000
Long term debt 3,000
Common Stock 7,000
Retained Earnings 13,000
Total Liabs & Eq $40,000 __
Will Ma & Pa be able to get by without any External Funding Required in 2009? .
If not, how much will they need? $________.
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https://brainmass.com/business/business-management/external-funds-needed-258316
Solution Preview
Please see the attached file for the calculations.
Will Ma & Pa …
