8. You have just completed the first year of operation for your business and have the following information: sales, $200

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8. You have just completed the first year of operation for your
business and have the following information: sales, $200,000; cost
of goods, $140,000; rent, $18,000; utilities, $8,400; insurance,
$2,000; equipment, $3,500; and interest, $10,000. Your forecast
indicates that your sales will increase by 20 percent. Your rental
agreement provides for a 3 percent increase per year. You read an
article indicating that utility costs in your area will increase by
10 percent next year. You just received a notice from your
insurance company stating your quarterly premium is increasing to
$600 beginning the first quarter of next year. Your equipment
expense will not change, but the amortization schedule on your
current loan indicates that interest expense for next year should
be $9,000.
a. Using this data, construct an actual income statement for
this year and a pro forma income statement for next year.
b. By what percentage did your net income change?
c. What are your current profit margin and your pro forma profit
margin?
d. In your business, assets and liabilities have historically
varied with sales. Assets are usually 80 percent of sales, and
liabilities are usually 55 percent of sales. You anticipate that
you will have no owner payout of net profit. Using the percentage
of sales method, determine if any additional financing is needed
for your business next year.