Task: Black Jackson Co. has the following balance sheet as of December 31, 2003.

Assets:

Current Assets                       $600,000
Fixed Assets:                         $400,000
Total assets:                       $1,000,000

Claims:

Accounts payable:                  $100,000
Accruals:                              $100,000
Notes Payable:                      $100,000
ToT Current Liabs:                 $300,000
Long Term Debt:                   $300,000
ToT equity:                          $400,000
TOT claims                         $1,000,000

In the year of 2003, the company reported sales of $5 million, net income of $100,000, and dividends of $60,000. The company anticipates its sales will increase 20% in 2004 and its dividend payout will remain at 60%. Assume the company is at full capability, so its assets and spontaneous liabilities will rise proportionately with a raise in sales.

Suppose the company uses the AFN formula and all additional funds required (AFN) will come from issuing new long-term debt. Given its forecast, how much long-term debt will the company have to issue in the year of 2004?

1. Please describe (display) and solve step by step on an excel spreadsheet.

2. Do the new financial statements using the performing technique.

3. And display the old and new Current Ratios.