Use the attached 2015 Pro Forma Statements to answer questio

Use the attached 2015 Pro Forma Statements to answer questions 4 and 5. Question #4=Comparion of Ration Box and #5 Answer questions A & B which is in the box.

I have pasted the questions that are in the assigned numbered boxes, with clarity.

Question4

  

Question4

New Debt required (rounded up to nearest 100,000):

Additional Interest Expense:

Comparison of Ratios (formulas are for \"After\" computation)

SDPC Before Expansion

Industry Median

SDPC After Expansion

Debt-equity ratio = (Total liabilities + New Debt) / Total equity

Pre-tax Profit margin = (Taxable Income - New Interest) / Sales

Pre-tax Return on assets = (Taxable income - New Interest) / Total assets

Pre-tax Return on equity = (Taxable income - New Interest) / Total equity

Question 5

a. Input the projected 12% growth rate and the $75 million increase in Fixed Assets in the pro forma Input parameters box. Under these assumptions, how much external financing will SDPC need to implement the new production line project? b. Re-compute the selected ratios and discuss any significant changes that the projected growth and expansion investment will cause. Assume that the required external financing will come from Debt.

Managerial Finance Course Project (1)- Excel Insert Page Layout FormulasData Review View Tell me what you want to do... Dianna Hall s Cut AutoSum , A Fill Merge & Center. $, % , Conditional Format as Cell Formatting Table Styles Paste Insert Delete Format B l u. | Er·· ., Sort & Find & Filter Select Format Painter e Clear . Clipboard Font Alignment Number Cells Editing R3 M N Naw Dabt requirad (roundad up to nearest 100,000): Additionel Interest Expense 79 SDPC Before for \"After Debt-equity ratio-[Total liabilities New DebtlTotal equity Pre-tas. Profit margin (Taseable Inome-No·Interest)! Sales Pre-tax Return on assets [Taxable income New Interest)Total assets Pre-ta Return on (Taxable income-Ne. Interest) , Total equit 87 a. Input the projected 12% growth rate and the $75 million increase in Fixed Assets in the pro forma Input parameters box. Under these assumptions, how much external financing will SDPC need to implement the new production line project? b. Re-compute the selected ratios and discuss any significant changes that the projected growth and expansion investment will cause. Assume that the required external financing will come from Debt. 95 96 M...Part 1 FS Analysis Part 1 Ratio Analysis Part 1 Cash Flow Analysis Part 2 Growth Part 3 -F .. +70% 10:00 AM OType here to search fa ^41) 1/8/2018

Solution

Solution: Assuming the interest expense is completely for the long term debt Interest rate applicable is 10000800/127796152*100 7.83% New Debt required (rounded up to nearest 100,000):      41,200,000 ($41,165,752 rounded up to nearest 100,000) Additional Interest Expense @ 7.83%:        3,225,960 Comparison of Ratios (formulas are for \"After\" computation) SDPC Before SDPC After Expansion Industry Median Expansion Debt-equity ratio = (Total liabilities + New Debt) / Total equity                 0.43                                                  0.93 Pre-tax Profit margin = (Taxable Income - New Interest) / Sales                 0.13                                                  0.12 Pre-tax Return on assets = (Taxable income - New Interest) / Total assets                 0.19                                                  0.18 Pre-tax Return on equity = (Taxable income - New Interest) / Total equity                 0.30                                                  0.29 Please note that more information is required to answer question no.5 (Like tax rate, original financial statement)