CFIN6
Chapter 16 Spreadsheet Problem
Financial Planning and Control
Use the model in File C16 to solve this problem.
Stendardi Industries’ financial statements for the past year are shown in the following tables.
Stendardi Industries: Balance Sheet as of December 31 ($ million)
Cash $ 4.0 Accounts payable $ 8.0
Receivables 12.0 Notes payable 5.0
Stendardi Industries: Balance Sheet as of December 31 ($ million)
Sales $ 80.0
Operating costs (71.3)
Earnings before interest and taxes $ 8.7
Interest ( 2.0)
Assume that the firm has no excess capacity in fixed assets, the interest rate for short-term debt is 10
percent, the interest rate for long-term debt is 12 percent, and that the projected annual sales growth rate
for the next five years is 15 percent.
a. Stendardi plans to finance its additional funds needed with 50 percent short-term debt and 50 percent
long-term debt. Using the projected balance sheet method, prepare the firm’s pro forma financial
CFIN6
statements for the next five years. Determine the following: (1) the additional funds needed, (2) the
current ratio, (3) the debt ratio, (4) the return on equity (ROE) and the return on assets (ROA), (5)
profit margin, and (6) the total assets turnover.