ACC – The FINC 5000 Associates Corporation (FAC) and The Webster Wonders Corporation (WWC)

| August 14, 2017

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 25% 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 CorporationFinancial ForecastEstimatedThis year for next yearSales $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) = ________2. The Webster Wonders Corporation (WWC) has begun selling a new product and they want you to help them determine if they need additional funding (AFN) next year. Using the AFN formula method, calculate WWC’s AFN for next year (if any).The company’s latest financial statements are shown below. Sales growth next year is forecast to be 25% and the net profit margin is expected to remain the same as it is this year. Cash, A/R, Inventory, A/P, and Accruals all vary directly with sales. The company is not operating at capacity and expects to be able to handle the increase in sales without adding fixed assets. Also, the company expects to pay out 60% of any profits as dividends.Webster Wonders CorporationFinancial StatementsHistoricalThis yearIncome statement:Sales $1,000Costs $950Profit $50Balance Sheet:Cash $100A/R $200Inventory $200Fixed assets $500Total assets $1,000A/P $50Accruals $50N/P $150LTD $400Common Stock $100Ret earnings $250Total Liabilities & Equity $1,000

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