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Cooley Textile’s 2000 financial statements

Q16. Cooley Textile’s 2000 financial statements are shown below.

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Balance Sheet
Assets $ (000) Liabilities & Equity $ (000)
Cash (3%) 1,080 Accounts payable (20%) 4,320
Accounts receivable (18%) 6,480 Accruals (7%) 2,880
Inventory (25%) 9,000 Notes payable 2,100
Total current assets 16,560 Total current liabilities 9,300
Fixed assets (35%) 12,600 Mortgage Bonds 3,500
Total debt 12,800
Common stock 3,500
Retained earnings 12,860
29,160 29,160
Income Statement
$ (000)
sales 36,000
Operating cost (90.11%) 32,440
EBIT 3,560
Interest 560
EBT 3,000
Tax (40% of EBT) 1,200
Net income 1,800
Dividend (45% of net income) 810
Retained earnings 990

Suppose 2001 sales are projected to increase by 15% over 2000 sales. Assume that the company was operating at full capacity in 2000, that it cannot sell off any of its fixed assets, and that any required financing will be borrowed as notes payable. Also assume that assets, spontaneous liabilities, and operating costs are expected to increase in proportion to sales. Use the percentage of sales method to develop a pro forma balance sheet and income statement for December 31, 2001. Use the pro forma income statement to determine the addition to retained earnings. Interest, Mortgage Bonds and Common Stocks will remain content.

Q17.

Balance Sheet
Assets $ (000) Liabilities & Equity $ (000)
Cash (5%) 1,800 Accounts payable (20%) 7,200
Accounts receivable (30?%) 10,800 Accruals (7%) 3,472
Inventory (35%) 12,600 Notes payable 2,520
Total current assets 25,200 Total current liabilities 13,192
Fixed assets (60%) 21,600 Mortgage Bonds 5,000
Total debt 18,192
Common stock 2,000
Retained earnings 26,608
46,800 46,800
Income Statement
$ (000)
sales 36,000
Operating cost (85.5%) 30,783
EBIT 5,217
Interest 1,017
EBT 4,200
Tax (40% of EBT) 1,680
Net income 2,520
Dividend (45% of net income) 1,512
Retained earnings 1,008

Suppose 2001 sales are projected to increase by 20% over 2000 sales. Assume that the company was operating at full capacity in 2000, that it cannot sell off any of its fixed assets, and that any required financing will be borrowed as notes payable. Also assume that assets, spontaneous liabilities, and operating costs are expected to increase in proportion to sales. Use the percentage of sales method to develop a pro forma balance sheet and income statement for December 31, 2001. Use the pro forma income statement to determine the addition to retained earnings. Interest, Mortgage Bonds and Common Stocks will remain content.

Q18. Using the data below calculate the firm’s current and quick ratios for each year.

ITEM 2006 2007 2008 2009
TOTAL CURRENT ASSETS 16,950 21,900 22,500 27,000
TOTAL CURRENT LIABELITIES 9,000 12,600 12,600 17,400
INVENTORY 6,000 6,900 6,900 7,200

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