CN Railways is North America's fifth largest railway. Forecast the financial statements for CN for Year 11. Use the percent of sales method based on Year 10 and the assumptions listed below. Please note the ratios to sales provided in the table which are useful for making the forecast.
Sales growth of 10%. The cost of debt is 4.59%. The tax rate is 31.943%. The depreciation rate is 3%. CAPEX is $1,600 Million. The following accounts are constant: Intangible assets, Deferred taxes, and Common Stock. Long term debt is the PLUG variable. No dividends.
Forecast the financial statements for CN. What are the additional funds needed (AFN) in Year 11? The AFN is the change in the plug account from Year 10 to Year 11.
| Income Statement and Balance Sheet |
| As of December 31, Year 10 ($ 000,000s) |
| | Year 10 | Ratios | Forecast |
| Revenue | $6,110 | | $6,721 |
| COGS | 2,550 | 0.417349 | |
| Dep. Exp. | 499 | | |
| SG&A | 1,945 | 0.318331 | |
| EBIT | 1,116 | | |
| Int. Exp. | 277 | | |
| Income before Taxes | 839 | | |
| Income Taxes | 268 | | |
| Net income | $571 | | |
| ASSETS | Year 10 | Ratios | Forecast |
| Total Current Assets | 1,163 | 0.190344 | |
| PP&E | 16,898 | | |
| Intangible assets | 863 | | 863 |
| Total assets | $18,924 | | |
| Total Current liabilities | 2,134 | 0.349264 | |
| Deferred Taxes | 5,160 | | 5,160 |
| Long-term debt | 5,003 | | |
| Common Stock | 3,558 | | 3,558 |
| Retained earnings | 2,762 | | |
| Total Owners Equity | 6,627 | | |
| Total liabilities and Owners equity | 18,924 | | |
◦ $64 million
◦ $165 million
◦ $342 million
◦ $580 million
◦ $965 million
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