FINANCE 6560-Pro Forma Income Statement-Roberts Inc. (in millions of dollars) 2015

Complete Problems 17-7 (one year pro forma statement) and 17-8 (total liabilities estimation and forecast of long-term debt financing need) in your course text. In addition, provide two or more suggestions on what Ambrose Inc. could do to reduce the forecasted debt financing (the managerial part of financing). Be sure to provide rationales as to why your suggestions will be effective in reducing the forecasted debt financing need.17-7: Pro Forma Income Statement – Roberts Inc. (in millions of dollars) 2015 (last year) Change Forecast Formula1, Sales $3,000.00 2. Operating costs excluding depreciation $2,450.00 3. EBITDA $550.00 4. Depreciation $250.00 5. EBIT $300.00 6. Interest $125.00 7. EBT $175.00 8. Taxes (40%) $70.00 year-end sales are expected to be 10% higher than the 3 billion in sales generated last yearyear-end operation costs, excluding depreciation, are expected to equal 80% of year-end salesDepreciation is expected to increase at the same rate as salesinterest costs are expected to remain unchangedthe tax rate is expected to remain at 40%on the basis of that information what will be the forecast for robert’s year-end net incomeProblem 2At year-end 2015Total Assets: $1.2 millionAccounts payable $375,000Sales $2.5 million (2015)— increase sales by 25% in 2016assets and account payable are proportional to sales and grow at same rateno current liabilities other than account payableCommon stock amounted to $245,000 in 2015retained earnings $295,000Plans to sell new common stock in amount of $75,000Profit Margin on sales 6%60% of earnings will be retainedWhat were total liabilities in 2015?How much new long-term debt financing will be needed in 2016? (hint:AFN-New Stock = New Long-term debt)