Minosa

MINOSO CORPORATION

Additional Funds Needed (AFN) and Long-Term Financial Planning

RW Melicher

The Minoso Corporation’s 2008 income and balance sheet statements follow.

__________________________________

Minoso Corporation

Income Statement for December 31, 2008

(Thousands of Dollars)

__________________________________

Sales $15,000

Operating expenses -13,000

EBIT 2,000

Interest 400

EBT 1,600

Taxes (40%) 640

Net income 960

Cash dividends (40%) 384

Added retained earnings $576

Minoso Corporation

Balance Sheet as of December 31, 2008

(Thousands of Dollars)

______________________________________________________________________________

Cash $ 1,000 Accounts payable $ 1,600

Accounts receivable 2,000 Bank Loan 1,800

Inventories 2,200 Accrued liabilities 1,200

Total current assets 5,200 Total current liabilities 4,600

Long-term debt 2,200

Fixed assets, net 6,800 Common stock 2,400

Total assets $12,000 Retained earnings 2,800

Total liabilities & equity $12,000

______________________________________________________________________________

The Minoso Corporation anticipates a 20 percent increase in sales for 2009, 2010, and 2011.

Minoso is currently operating at full capacity and thus expects to increase its investment in both

current and fixed assets in order to support the increase in forecasted sales.

a) Estimate the additional funds needed (AFN) for 2009 using the formula or equation method

that is based on constant “percent of sales” relationships.

b) Prepare an Excel spreadsheet model that projects the income statement, balance sheet, and

statement of cash flows for 2009 prior to obtaining any additional financing. Use a separate

AFN long-term financing (liability/equity) account to show the amount of financing needed

to make the balance sheet balance. Compare the AFN estimates from the formula method

with your spreadsheet model AFN estimate.

c) Extend your 2009 spreadsheet-based financial statement projections for two additional...