sustainable growth rate

Question

sustainable growth rate

Question # 00072232 Posted By: solutionshere Updated on: 05/23/2015 04:01 AM Due on: 05/23/2015

Subject General Questions Topic General General Questions Tutorials:

Question

Chapter 3 Problem 14

a	Using the information provided, construct a monthly cash budget for October through December 2011. Based on your analysis, will Noble enjoy a surfeit of cash, or require external financing?
b	Construct a pro forma income statement for the first fiscal quarter of 2012 and a pro forma balance sheet as of December 31, 2011. What is your estimated external financing required for December 31?
c	Does the December 31, 2011, estimated external financing equal your cash surplus (deficit) for this date from your cash budget?
d	Based on your answers above, construct a cash flow forecast for Noble for the period October through December 2011.
Noble Selected Information and Financial Statements

	Sales (20 percent for cash, the rest on 30-day credit terms):
	2011 Actual			2011Projected
	July	August	September	October	November	December
	76,000	88,000	266,000	125,000	51,000	53,000

	Purchases (all on 60-day terms):
	2011 Actual			2011 Projected
	July	August	September	October	November	December
	116,000	122,000	257,000	62,000	27,000	26,000


Salaries payable monthly		20,000
Principal payment on debt due in December	25,700
Interest due in December		9,000
Dividend payable in December		15,000
Taxes payable in November		19,000
Addition to accumulated depreciation in December	4,000

Cash balance on October 1, 2011		35,000
Minimum desired cash balance		15,000




Noble’s annual income statement and balance sheet for September 30, 2011 appear below.
Additional information about the company's accounting methods and expectations for
the last three months of 2011 appear in the footnotes.

		Noble
		Annual Income Statement
		Fiscal Year ended September 30, 2011 ($ 000)

Net sales		1,581.6
Cost of goods sold¹	1,098.0
Gross profits		483.6
Selling and administrative expenses²	240.0
Interest expense		18.0
Depreciation³		16.0
Net profit before tax	209.6
Tax at 33%		69.2
Net profit after tax		140.4