The FINC 5000 Associates Corporation (FAC)

1. The FINC 5000 Associates Corporation (FAC) has begun selling a new product and they want you to help them with next year’s pro forma financial statements. Using the worksheet below, complete the company’s forecast.

Assumptions:

To begin with, FAC is sure sales will grow 20% next year. Assume that is true. Then assume that COGS, Current Assets, and Current Liabilities all vary directly with Sales (that means if sales grows a certain percentage, then the account in question will grow by that same percentage). Assume that fixed expenses will remain unchanged and that $2,000 worth of new Fixed Assets will be obtained next year. Lastly, the current dividend policy will be continued next year.

FINC 5000 Associates Corporation
Financial Forecast

Estimated
This year for next year

Sales $10,000 ________ 
COGS 4,000 ________ 
Gross Profit 6,000 ________ 
Fixed Expenses 3,000 ________ 
Before Tax Profit 3,000 ________ 
Tax @ 33.3333% 1,000 ________ 
Net Profit $2,000 ________ 

Dividends $0 ________ 

Current Assets $25,000 ________ 
Net Fixed Assets 15,000 ________ 
Total Assets $40,000 ________ 

Current Liabilities $17,000 ________ 
Long term debt 3,000 ________ 
Common Stock 7,000 ________ 
Retained Earnings 13,000 ________ 
Total Liabs & Eq $40,000 ________ 

(AFN) = ________