FINANCE 6560-Pro Forma Income Statement-Roberts Inc. (in millions of dollars) 2015

Complete Problems 17-7 (one year pro forma statement) and 17-8 (total liabilities estimation and forecast of long-term debt financing need) in your course text. In addition, provide two or more suggestions on what Ambrose Inc. could do to reduce the forecasted debt financing (the managerial part of financing). Be sure to provide rationales as to why your suggestions will be effective in reducing the forecasted debt financing need.

17-7: Pro Forma Income Statement - Roberts Inc. (in millions of dollars) 2015 (last year) Change Forecast Formula

1, Sales $3,000.00

2. Operating costs excluding depreciation $2,450.00
3. EBITDA $550.00
4. Depreciation $250.00
5. EBIT $300.00
6. Interest $125.00
7. EBT $175.00
8. Taxes (40%) $70.00
year-end sales are expected to be 10% higher than the 3 billion in sales generated last year

year-end operation costs, excluding depreciation, are expected to equal 80% of year-end sales

Depreciation is expected to increase at the same rate as sales

interest costs are expected to remain unchanged

the tax rate is expected to remain at 40%

on the basis of that information what will be the forecast for robert's year-end net income

Problem 2

At year-end 2015

Total Assets: $1.2 million

Accounts payable $375,000

Sales $2.5 million (2015)

--- increase sales by 25% in 2016

assets and account payable are proportional to sales and grow at same rate

no current liabilities other than account payable

Common stock amounted to $245,000 in 2015

retained earnings $295,000

Plans to sell new common stock in amount of $75,000

Profit Margin on sales 6%

60% of earnings will be retained

What were total liabilities in 2015?

How much new long-term debt financing will be needed in 2016? (hint:AFN-New Stock = New Long-term debt)