24/7 Homework Help

Studykind Will Help You Write Your Essays and Term Papers

From initial topic to finished paper

Question:

Prepare a second round of projected five-year financial statements showing that the initial financing needed will be obtained equally each year by issuing new stock (50 percent) and by borrowing from lenders (50 percent).Prepare a second round of projected five-year financial statements showing that the initial financing needed will be obtained equally each year by issuing new stock (50 percent) and by borrowing from lenders (50 percent).

by | Jun 19, 2022 | Questions & Answers

The GENENTECH CORPORATION spent several years working on developing a DHA product that can be used t Show more The GENENTECH CORPORATION spent several years working on developing a DHA product that can be used to provide a fatty acid supplement to a whole variety of food products. DHA stands for docsahexaenoic acid an omega-3 fatty acid found naturally in cold-water fish. The benefits of fatty fish oil have been cited in studies of the brain eyes and the immune system. Unfortunately it is both difficult to consume enough fish to get the benefits of DHA and most individuals might be concerned about the taste consequences associated with adding fatty fish oil to eggs ice cream or chocolate candy. To counter these constraints Genentech and several competitors have been able to grow algae and other plants that are rich in DHA. The resulting chemical compounds then are used to enhance a variety of food products. Genentechs initial DHA product was designed as additives to dairy products and yogurt. For example the ventures DHA product was added to cottage cheese and fruit-flavored yogurts to enhance the health benefits of those products. After the long product development period Genentech began operations in 2012. Income statement and balance sheet results for 2013 the first full year of operations have been prepared. Genentech however is concerned with forecasting its financial statements for next year because it is uncertain as to the amount of additional financing of assets that will be needed as the venture ramps up sales next year. Genentech expects to introduce a DHA product that can be added to chocolate candies. Not only will consumers get the satisfaction of the taste chocolate candies they will benefit from the DHA enhancement. Since this is expected to be a block buster new product sales are expected to increase 50 percent next year (2014) even though the new product will come on line in mid-year. An additional 80 percent increase in sales is expected the following year (2015). _______________________________ GENENTECH CORPORATION Income Statement for December 31 2013 (Thousands of Dollars) __________________________________ Sales $15000 Operating expenses -13000 EBIT 2000 Interest 400 EBT 1600 Taxes (40%) 640 Net income 960 Cash dividends (40%) 384 Added retained earnings $576 GENENTECH CORPORATION Balance Sheet as of December 31 2013 (Thousands of Dollars) ________________________________________________________________________ Cash & marketable securities $ 1000 Accounts payable $ 1600 Accounts receivable 2000 Bank Loan 1800 Inventories 2200 Accrued liabilities 1200 Total current assets 5200 Total current liabilities 4600 Long-term debt 2200 Fixed assets net 6800 Common stock 2400 Total assets $12000 Retained earnings 2800 Total liabilities & equity $12000 ________________________________________________________________________ A.Estimate the additional funds needed (AFN) for 2014 using the formula method based on percent of sales relationships. B.Estimate the AFN for Genentech for 2015. C.Prepare pro forma income and balance sheet statements for 2014 before obtaining any additional financing. Why does the AFN from the spreadsheet projections differ from the AFN estimated in Part A? D.Prepare a second iteration of your pro forma financial statements for 2014 if the initial AFN estimate is to be financed by additional long-term funds at a 10 percent interest rate. E.Prepare pro forma financial statements for 2015 that build on to the pro forma results obtained in Part D. F. Prepare projected income statements balance sheets and statements of cash flow for Genentech for 2014 and 2015 before obtaining of any additional financing. What are the amounts of additional funds needed? G. Assume that sales are expected to grow at 100 percent in 2016 (over the 2015 sales level) 50 percent in 2017 and 20 percent in 2018. Extend your projected financial statements prepared in Part E to include years 2016 2017 and 2018. What will be the maximum amount of additional funds needed during your five-year forecast? H. Assume that you will acquire the amount funds needed in Part F by selling or issuing more common stock and by borrowing from lenders at a 10 percent interest rate. Prepare a second round of projected five-year financial statements showing that the initial financing needed will be obtained equally each year by issuing new stock (50 percent) and by borrowing from lenders (50 percent). Show less

HOME TO CERTIFIED WRITERS

Why Place An Order With Us?

  • Certified Editors
  • 24/7 Customer Support
  • Profesional Research
  • Easy to Use System Interface
  • Student Friendly Pricing

Have a similar question?

Services that we offer

Your Paper Is In Safe Hands

PLAGIRAISM FREE PAPERS

All papers we provide are well-researched, properly formatted and cited.

TOP QUALITY

All papers we provide are well-researched, properly formatted and cited.

HIGHLY SECURED

All papers we provide are well-researched, properly formatted and cited.

Related Assignments

Study more efficiently

Quickly get your essay from idea to final graft save time, money and effort.

Boost your grade

Get through your toughest problem and learn how to solve them from expert writers

Essay Writing Service Ready to Help Online 24/7

Hire a professional just from $9.99

Click here

Chat now
1
Powered by Studykind
Hello! Welcome to to our whatapp support.

We offer READY solutions, HIGH QUALITY PLAGIARISM FREE essays and term-papers.

We are online and ready to help.