Final answer:
To calculate next year’s pro forma value for current liabilities for Moxie, Incorporated, first determine current liabilities by subtracting net working capital from current assets. Next, increase this figure by 6 percent to project next year’s current liabilities in line with the sales increase. The pro forma value for next year’s current liabilities, after a 6 percent sales increase, is estimated at $89,040.
Step-by-step explanation:
The student's question pertains to making a pro forma financial statement for Moxie, Incorporated, which allows us to project future financial figures based on certain assumptions. We are given that Moxie, Incorporated has annual sales of $564,000, current assets of $276,000, and net working capital (NWC) of $192,000. Since net working capital equals current assets minus current liabilities, we can calculate current liabilities for the current year, and then project them for the next year as sales increase by 6 percent.
First, we find the current liabilities:
- Net Working Capital = Current Assets - Current Liabilities
- $192,000 = $276,000 - Current Liabilities
- Current Liabilities = $276,000 - $192,000 = $84,000
Next, we adjust for the 6 percent increase in sales (and consequently a 6 percent increase in current liabilities as well, since we are assuming that all costs and working capital vary directly with sales):
- Projected Current Liabilities = Current Liabilities × (1 + Sales Increase)
- Projected Current Liabilities = $84,000 × (1 + 0.06)
- Projected Current Liabilities = $84,000 × 1.06
- Projected Current Liabilities = $89,040
Therefore, the pro forma value for current liabilities for next year, with a projected 6 percent increase in sales, would be approximately $89,040.