Garlington Technologies Inc.’s 2010 financial statements are shown below: Balance Sheet as of December 31, 2010 Suppose that in 2011 sales increase by 10% over 2010 sales and that 2011 dividends will...

Garlington Technologies Inc.’s 2010 financial statements are shown below:
Balance Sheet as of December 31, 2010

Suppose that in 2011 sales increase by 10% over 2010 sales and that 2011 dividends will increase to $112,000. Forecast the financial statements using the forecasted financial statement method. Assume the firm operated at full capacity in 2010. Use an interest rate of 13%, and assume that any new debt will be added at the end of the year (so forecast the interest expense based on the debt balance at the beginning of the year). Cash does not earn any interest income. Assume that the AFN will be in the form of notespayable.

Answered Same DayDec 24, 2021

Answer To: Garlington Technologies Inc.’s 2010 financial statements are shown below: Balance Sheet as of...

David answered on Dec 24 2021

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B512 SOLUTIONS TO CHAPTER 4 PROBLEMS
4-7
a. & b.
Garlington Technologies Inc.
Pro Forma Income Statement
December 31, 2002
Forecast 1st Pass AFN 2nd Pass
2001 Basis Additions 2002 Effects 2002
Sales $3,600,000 1.10 ( Sales01 $3,960,000 $3,960,000
Operating costs 3,279,720 0.911 ( Sales02 3,607,692 3,607,692
EBIT $ 320,280 $ 352,308 $ 352,308
Interest 20,280 20,280 +8,371Error! Reference source not found.** 28,651
EBT $ 300,000 $ 332,028 $ 323,657
Taxes (40%) 120,000 132,811 129,463
Net income $ 180,000 $ 199,217 $ ...

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Garlington Technologies Inc.’s 2010 financial statements are shown below: Balance Sheet as of December 31, 2010 Suppose that in 2011 sales increase by 10% over 2010 sales and that 2011 dividends will...

Answer To: Garlington Technologies Inc.’s 2010 financial statements are shown below: Balance Sheet as of...

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