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F. Naz
F. Naz, Chartered Accountant
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Experience:  Experience with chartered accountancy
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I need the following answered in excel by Saturday. Thank you. (12–5)

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I need the following answered in excel by Saturday. Thank you.

(12–5) At year-end 2010, Bertin Inc.’s total assets were $1.2 million and its accounts payable were $375,000. Sales, which in 2010 were $2.5 million, are expected to increase by 25% in 2011. Total assets and accounts payable are proportional to sales, and that relationship will be maintained. Bertin typically uses no current liabilities other than accounts payable. Common stock amounted to $425,000 in 2010, and retained earnings were $295,000. Bertin has arranged to sell $75,000 of new common stock in 2011 to meet some of its financing needs. The remainder of its financing needs will be met by issuing new long-term debt at the end of 2011. (Because the debt is added at the end of the year, there will be no additional interest expense due to the new debt.) Its profit margin on sales is 6%, and 40% of earnings will be paid out as dividends.
a. What were Bertin’s total long-term debt and total liabilities in 2010?
b. How much new long-term debt financing will be needed in 2011?
(Hint: AFN − New stock = New long-term debt.)

(12–6) The Booth Company’s sales are forecasted to double from $1,000 in 2010 to $2,000 in 2011. Here is the December 31, 2010, balance sheet:
Cash $ 100 Accounts payable $ 50
Accounts receivable 200 Notes payable 150
Inventories 200 Accruals 50
Net fixed assets 500 Long-term debt 400
Common stock 100
Retained earnings 250
Total assets $1,000 Total liabilities and equity $1,000
Booth’s fixed assets were used to only 50% of capacity during 2010, but its current assets were at their proper levels in relation to sales. All assets except fixed assets must increase at the same rate as sales, and fixed assets would also have to increase at the same rate if the current excess capacity did not exist. Booth’s after-tax profit margin is forecasted to be 5% and its payout ratio to be 60%. What is Booth’s additional funds needed (AFN) for the coming year?

(12–7) Upton Computers makes bulk purchases of small computers, stocks them in conveniently located warehouses, ships them to its chain of retail stores, and has a staff to advise customers and help them set up their new computers. Upton’s balance sheet as of December 31, 2010, is shown here (millions of dollars):
Cash $ 3.5 Accounts payable $ 9.0
Receivables 26.0 Notes payable 18.0
Inventories 58.0 Accruals 8.5
Total current assets $ 87.5 Total current liabilities $ 35.5
Net fixed assets 35.0 Mortgage loan 6.0
Common stock 15.0
Retained earnings 66.0
Total assets $122.5 Total liabilities and equity $122.5
Sales for 2010 were $350 million and net income for the year was $10.5 million, so the firm’s profit margin was 3.0%. Upton paid dividends of $4.2 million to common stockholders, so its payout ratio was 40%. Its tax rate is 40%, and it operated at full capacity. Assume that all assets/sales ratios, spontaneous liabilities/sales ratios, the profit margin, and the payout ratio remain constant in 2011.
a. If sales are projected to increase by $70 million, or 20%, during 2011, use the
AFN equation to determine Upton’s projected external capital requirements.
b. Using the AFN equation, determine Upton’s self-supporting growth rate. That
is, what is the maximum growth rate the firm can achieve without having to
employ nonspontaneous external funds?
c. Use the forecasted financial statement method to forecast Upton’s balance sheet
for December 31, 2011. Assume that all additional external capital is raised as a
bank loan at the end of the year and is reflected in notes payable (because the
debt is added at the end of the year, there will be no additional interest expense
due to the new debt). Assume Upton’s profit margin and dividend payout ratio
will be the same in 2011 as they were in 2010. What is the amount of notes payable reported on the 2011 forecasted balance sheets? (Hint: You don’t need to forecast the income statements because you are given the projected sales, profit margin, and dividend payout ratio; these figures allow you to calculate the 2011 addition to retained earnings for the balance sheet.)
Submitted: 2 years ago.
Category: Homework
Expert:  F. Naz replied 2 years ago.
Will try my best to reply by your deadline.
Expert:  F. Naz replied 2 years ago.
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