sustainable growth rate

| September 29, 2018

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

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