FIN 486 CART Become Exceptional--fin486cart.com FIN 486 Entire Course | Page 13

$ 9,600 $ 9,000 $10,000 $10,000 3,400 2,800 Total stockholders’
equity $13,400 $12,800 Total liabilities and stockholders’ equity
$23,000 $21,800 Accruals Total current liabilities Long-term debt
Total liabilities Common stock Retained earnings Keith Corporation
Income Statement Data (2015) Keith Corporation Balance Sheets
December 31 Assets Cash 2015 2014 $ 1,500 $ 1,000 Depreciation
expense $1,600 Earnings before interest and taxes (EBIT) 2,700
Interest expense 367 Net profits after taxes 1,400 Tax rate 40% a.
Calculate the firm’s net operating profit after taxes (NOPAT) for the
year ended December 31, 2015, using Equation 4.1. b. Calculate the
firm’s operating cash flow (OCF) for the year ended December 31,
2015, using Equation 4.3. c. Calculate the firm’s free cash flow (FCF)
for the year ended December 31, 2015, using Equation 4.4. d.
Interpret, compare, and contrast your cash flow estimates in parts b
and c. P4–19 Integrative: Pro forma statements Red Queen
Restaurants wishes to prepare financial plans. Use the financial
statements and the other information provided below to prepare the
financial plans. The following financial data are also available: (1)
The firm has estimated that its sales for 2016 will be $900,000. (2)
The firm expects to pay $35,000 in cash dividends in 2016. (3) The
firm wishes to maintain a minimum cash balance of $30,000. (4)
Accounts receivable represent approximately 18% of annual sales. (5)
The firm’s ending inventory will change directly with changes in
sales in 2016. (6) A new machine costing $42,000 will be purchased
in 2016. Total depreciation for 2016 will be $17,000. (7) Accounts
payable will change directly in response to changes in sales in 2016.
(8) Taxes payable will equal one-fourth of the tax liability on the pro
forma income statement. (9) Marketable securities, other current
liabilities, long-term debt, and common stock will remain unchanged.
a. Prepare a pro forma income statement for the year ended December
31, 2016, using the percent-of-sales method. b. Prepare a pro forma
balance sheet dated December 31, 2016, using the judgmental
approach. c. Analyze these statements, and discuss the resulting
external financing required. Red Queen Restaurants Income
Statement for the Year Ended December 31, 2015
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