New York Inc.

has assembled statements and information to prepare financial plans for the
coming year.

Information related to financial projections for the year 2019:

1. Projected sales will increase to Php 6,000,000.
2. Cost of goods sold includes Php 1,000,000 in fixed costs.
3. Operating expense includes Php 250,000 in fixed costs.
4. Interest expense will remain unchanged.
5. The firm will pay cash dividends amounting to 40% of net profit after taxes.
 the information given and the percent-of-sales method.
2. Prepare a Pro Forma Balance Sheet as of December 31, 2019, using the information
given and the judgmental approach. Include a reconciliation of the retained earnings
account.
3. Analyze these forecasted statements in terms of liquidity, solvency, profitability, and
marketability, and discuss the resulting external financing required. Show relevant
computations if necessary.
4. Determine the capital structure of the company using the 2019 Financial Statements
and discuss the advantages and disadvantages of having this capital structure. Show
relevant computations if necessary.
5. As the CFO of the company, how will you finance the external need? Explain
comprehensively by applying a cost – benefit analysis. Show relevant computations if
necessary.