Cash $ 550 Payables $1,600
Marketable Securities 250 Accruals
Current liabilities: 100
Inventories 2,100 Total current liabilities $2,150
Total assets current $4,300 Long term debt 2,200
Fixed assets 4500 Total liabilities 4350
Equity Shares: Total Assets $8,800
Total liabilities and stockholders’ equity $8.800
Pro forma balance sheet indicates that company needs to increase cash reserve by adding marketable assets. It will help them improve their liquidity, and have more funds available for operations. To increase cash flow, the accounts receivable were also increased. The changes to financing may also require the addition of long-term loans or capital injections by external investors. This is to help fund investment projects and expansion plans.
In general, it appears that Peabody & Peabody is on the right track to achieving financial security while also having the potential for future growth. By increasing its liquidity through various financing sources such as marketable securities and accounts receivable while keeping its total liabilities at manageable levels , Peabody & Peabody can ensure that it will remain financially sound even through periods of economic uncertainty.