27 Jul FINANCE 304 COMPUTER ASSIGNMENT INSTRUCTIONS: You Will Be Allowed To Do This Project On Any Spreadsheet Software Packages. The Instructor Currently Has Access To The Following Packages: (1) Excel (2) Quattro Pro. The Use Of Any Other Software May Be Ap
INSTRUCTIONS: You will be allowed to do this project on any spreadsheet software packages. The instructor currently has access to the following packages: (1) Excel (2) Quattro Pro. The use of any other software may be approved by the instructor.
PROJECT
Doredo Steel Company is a wholesale steel distributor which purchase steel in carload lots and sells to several thousand steel users. The nature of the steel business requires that the company maintain large inventories to take care of customer requirements in the event of mill strikes or other delays.
In examining records from 1992 to 2015, the company found consistent relationships among the following accounts as a percent of sales:
Current assets 20%
Net fixed assets 60% if Sales < $53 million
70%, otherwise.
Accounts payable 8%
Other current liab. 6%
Profit margin 12%
The company’s sales for 2016 were $40 million. The company expects to grow by $6 million per year over the next 5 years. The company wants to project its financial requirements for each of the next 5 years, assuming that the projected sales levels are achieved. Assume further that the company pays out 25 percent of earnings as dividends.
Construct pro forma balance sheets for the end of each of the next 5 years (from 2017 to 2021), assuming that 20 percent by issuing long-term debt, and 80 percent by selling new common stock.
NOTE: You will be expected to unload your file to the Canvas by 11:00 am on March 22.
NAME ____________________
____________________________________________________________________________________
Doredo Steel Company
PRO FORMA Balance Sheet
For the Period of 2017-2021
(Thousands of Dollars)
____________________________________________________________________________________
| YEAR | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 |
|
Sales |
40,000 |
$0.0 |
+N5+ |
+N6+ |
+N7+ |
$0.0 |
|
Current A |
10,000 |
$0.0 |
+P8+ |
+P9+ |
+P10+ |
$0.0 |
| Fixed A | 26,000
|
|||||
| Total | 36,000 |
| Acct Payable | 5,000 |
| Other cur L | 2,500 |
| L/t debt | 9,000 |
| Common St | 14,000 |
| Retained
|
5,500
|
| Tot. L&E | 36,000 |
*Interests $120,000 Constant
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