solution

You have developed the basic model of the fi nancial statements. Hopefully, it worked the fi rst time. However it is important to make sure that it balances under a variety of circumstances. For this assignment, assume a normal dividend payout of 50%. Check the balancing by varying the rate of growth of sales. Use high growth rates such as 20% and 50% per year and see how it performs. Th en use low growth scenarios such as –10% and –20% per year. Assume that extra cash is used fi rst to repay debt; if any is left over, pay it out as dividends. As before, assets should equal liabilities and all cash fl ow should be traceable and go to some use.