For the this case, answer four questions and It should be a professional narrative with embedded tables, graphs, etc…
1.Now complete the tables to develop pro forma financial statements for 1993 and 1994. For these calculations, assume that the bank is willing to maintain the present credit lines and to grant an additional $12,750,000 of short-term credit on January 1, 1993. In the analysis, take account of the amounts of inventory and accounts receivable that would be carried if inventory utilization (based on the cost of goods sold) and days sales outstanding were set at industry-average levels. Also, assume in your forecast that all of Garden State’s plans and predictions concerning sales and expenses materialize and that the firm pays no cash dividends during the forecast period. Finally, in your calculations use the cash and marketable securities account as the residual balancing figure. (Tables 1 and 2 show the completed worksheets for 1993 and 1994. )
In responding to Questions 2 through 4,no Lotus model modifications are required. Answers should be based solely on the data contained in the financial statements developed in response to Question 1.
2.Assume Garden State has determined that its optimal cash balance is 5 % of sales and that funds in excess if this amount will be invested in marketable securities which , on average, will earn 7% interest . Based on your forecasted financial statements, will Garden State be able to invest in marketable securities? Do your financial forecasts reveal any developing conditions that should be corrected?
3.Based on the forecasted developed earlier, would Garden State be able to retire all of the outstanding short term loans by December 31, 1993?
4.If the bank decides to withdraw the entire line of credit and to demand immediate repayment of the two existing loans (the short-term and long-term loans) extended to Garden State, what alternatives would be available to Garden State?
I upload case and tables
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