Use the percentage of sales forecasting method to compute the additional financing needed by Lambrechts Specialty Shops, Inc. (LSS), if sales are expected to increase from a current level of $20 million to a new level of $25 million over the coming year. LSS expects earnings after taxes to equal $1 million over the next year. LSS intends to pay a $300,000 dividend next year. The current year balance sheet for LSS is as follows: Lambrechts Specialty Shops, Inc. Balance Sheet as of December 31, 20X3 Cash      $1,000,000                  Accounts Payable                   $3,000,000 Accounts Receivable  1,500,000   Notes Payable                             3,000,000 Inventories      6,000,000      Long-Term Debt                       2,000,000 Net Fixed Assets           3,000,000     Stockholders’ Equity                3,500,00  Total Assets   $11,500,000    Total Liabilities and Equity   $11,500,000

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter4: Financial Planning And Forecasting
Section: Chapter Questions
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Use the percentage of sales forecasting method to compute the additional financing needed by Lambrechts Specialty Shops, Inc. (LSS), if sales are expected to increase from a current level of $20 million to a new level of $25 million over the coming year. LSS expects earnings after taxes to equal $1 million over the next year. LSS intends to pay a $300,000 dividend next year. The current year balance sheet for LSS is as follows:

Lambrechts Specialty Shops, Inc.

Balance Sheet as of December 31, 20X3

Cash      $1,000,000                  Accounts Payable                   $3,000,000

Accounts Receivable  1,500,000   Notes Payable                             3,000,000

Inventories      6,000,000      Long-Term Debt                       2,000,000

Net Fixed Assets           3,000,000     Stockholders’ Equity                3,500,00 

Total Assets   $11,500,000    Total Liabilities and Equity   $11,500,000

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