REQUIRED (additional requirements follow on page 723)
a. Identify clues from the financial statements and financial statement ratios for Year 3–Year
7 that might suggest that Massachusetts Stove Company is a mature business.
b. Design a spreadsheet for the preparation of projected income statements, balance sheets,
and statements of cash flows for MSC for Year 8–Year 12. Also forecast the financial statements
for each of these years under three scenarios: (1) best case, (2) most likely, and (3)
worst case.
REQUIRED (continued from page 721)
c. Calculate the financial statement ratios listed in Exhibit 10.16 for MSC under each of
the three scenarios for Year 8–Year 12.
Note: You should create a fourth spreadsheet as part of your preparation of the projected
financial statements that will compute the financial ratios.
d. What advice would you give the management of MSC regarding its decision to enter
the gas stove market? Your recommendation should consider the profitability and
risks of this action as well as other factors you deem relevant
