Problem: Cheryl Colby, the CFO of Charming Florist Ltd., has created the firm's pro forma balance sheet for the next fiscal year. Sales are projected to grow at 10 percent to the level of $330 million. Current assets, fixed assets, short-term debt, and long-term debt are 25 percent, 150 percent, 40 percent, and 45 percent of the total sales, respectively. Charming Florist pays out 40 percent of net income. The value of common stock is constant at $50 million. The profit margin on sales is 12 percent.
1. Based on Ms. Colby's forecast, how much external fund does Charming Florist need?
2. Reconstruct the current balance sheet based on the projected figures.
3. Lay out the firm's pro forma balance sheet for the next fiscal year.