The management of Coker Corp. is doing a quick forecast of 20X9 using the modifi

Question

The management of Coker Corp. is doing a quick forecast of 20X9 using the modified percentage of sales method in preparation for a more detailed planning exercise later in the month. The estimate is to assume a 11% growth in sales. All other line items are to be assumed to grow at the same rate except for fixed assets which is projected to increase by $97,000 due to an expansion program already underway. Approximate financial statements for the current year, 20X8, and a planning worksheet are shown below. The firm pays 8% interest on all of its debt. Assume the tax rate is a flat 25%. There are no plans for dividends or the sale of additional stock next year. Make a forecast of Coker's complete income statement and balance sheet. Enter your answers in thousands. For example, an answer of $12 thousands should be entered as 12, not 12,000. Round your answers to the nearest whole thousand. Enter all amounts as a positive numbers.

Explanation / Answer

Here we have used debt/Equity iteration to arrive at $98 Interest expense

Cooker Corp. Current and Projected Balance Sheets ($000 ($000 2008 2009 Revenue $626 $689 COGS 225 $248 Gross Margin $401 $441 Expenses 126 139 EBIT $275 $303 Interest 36 98 EAT $239 $205 Income Tax $60 $51 Net Income $179 $153 ASSETS Liabilities and Equity 2008 2009 2008 2009 Current Assets 170 189 C/L 89 98 F/A 534 631 Debt 245 $2,207 Equity 370 $523 TOTAL 2712 2829 2712 2829

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