Suppose Mick's is projecting a 20% increase in sales for the coming year, and that cost of goods sold and general/administrative expenses remain a...

Suppose Mick’sis projecting a 20% increase in sales for the coming year, and thatcost of goods soldand general/administrative expenses remain a constant percentageof sales. Also assume that the amount of depreciation and interest paid and the firm’stax rate (35%) remain unchanged. Create the Pro Forma Income Statementfor 2005.Assume the firm’s dividend payout is 50%. What will the firm pay out in dividendsin 2005?Assume all information given in part A. Also, assume all assets and current liabilitiesare proportional to sales but long-term debt and equity are not proportional to sales. Ifthe firm’s tax rate remains unchanged, the dividend payout is 50%, what is theexternal financing needed (EFN) for 2006? Create thePro Forma Balance Sheet for2005.C.Given all the information in part A & B. If the firm is only operating at 82% ofcapacity, what are full capacity sales and what is the externalfinancing needed (EFN)for 2005?D. Suppose Mick’swishes to maintain a sustainable growth rate of 30% per year.Is thisgrowth rate possible? What must the dividend payout ratio be to make this feasible?Mick’s PlaceAssets20042005Liabilities& Owner'sEquity20042005Current AssetsCurrent LiabilitiesCash815906Accounts Payable9831292AccountsReceivable24052510Notes Payable720840Inventory46084906Other105188Total CA78288322Total CL18082320Fixed AssetsLong-term Debt48174960Net PPE1516419167Owner's EquityTotal Assets2299227489Common Stock1000010000Retained Earnings636710209Total OE1636720209Total Liabilities & OE2299227489ncome Statement2005Sales33500Cost of Good Sold18970Depreciation1980EBIT12550Int486EBT12064Taxes4222NI7842