ACC - Problem 6-12 and 6-13

6-12 FORECASTING PRO FORMA FINANCIAL STATEMENTS
Prepare a pro forma income
statement and balance sheet for Webb Enterprises, found in Problem 6-7, where revenues are expected to grow by 20% in 2011. Make the following assumptions in making
your forecast of the firm’s balance sheet for 2011:
■ The income statement expenses are a constant percent of revenues except for interest, which remains equal in dollar amount to the 2010 level, and taxes, which equal
40% of earnings before taxes.
■ The cash and marketable securities balance remains equal to $500, and the remaining current asset accounts and fixed assets increase in proportion to revenues for
2010.
■ Net property, plant, and equipment increase in proportion to the increase in revenues.
■ Accounts payable increase in proportion to firm revenues.
■ Owners’ equity increases by the amount of firm net income for 2011 (no cash dividends are paid).
■ Long-term debt remains unchanged, and short-term debt changes in an amount that balances the balance sheet.

6-13 FORECASTING FIRM FCF Using your pro forma financial statements from Problem 6-12, estimate the firm’s FCF for 2011.