1. Cute Camel is able to achieve this level of increased sales, but its interest costs increase from 10% to 15% of earnings beforeinterest and taxes (EBIT).2. The company's operating costs (excluding depreciation and amortization) remain at 70% of net sales, and its depreciation andamortization expenses remain constant from year to year.3. The company's tax rate remains constant at 25% of its pre-tax income or earnings before taxes (EBT).4. In Year 2, Cute Camel expects to pay $100,000 and $1,281,375 of preferred and common stock dividends, respectively.Complete the Year 2 income statement data for Cute Camel, then answer the questions that follow. Be sure to round each dollar value to the nearestwhole dollar.Net salesLess: Operating costs, except depreciation and amortizationLess: Depreciation and amortization expensesOperating income (or EBIT)Less: Interest expensePre-tax income (or EBT)Less: Taxes (25%)Earnings after taxesLess: Preferred stock dividendsEarnings available to common shareholdersLess: Common stock dividendsContribution to retained earningsCute Camel Woodcraft CompanyIncome Statement for Year Ending December 31Year 1$15,000,00010,500,000600,000$3,900,000390,0003,510,000877,500$2,632,500100,0002,532,5001,053,000$1,479,500Year 2 (Forecasted)$600,000$III$1,822,062

An income statement displays the revenues, costs, and profitability of a business over time. It is…

Answered: 1. Cute Camel is able to achieve this…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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In year 1, AMC will earn $2,900 before interest and taxes. The market expects these earnings to grow at a rate of 2.7% per year. The firm will make no net investments (i.e., capital expenditures will equal depreciation) or changes to net working capital. Assume that the corporate tax rate equals 45%. Right now, the firm has $7,250 in risk-free debt. It plans to keep a constant ratio of debt to equity every year, so that on average the debt will also grow by 2.7% per year. Suppose the risk-free rate equals 4.5%, and the expected return on the market equals 9.9%. The asset beta for this industry is 1.93. Using the WACC, the expected return for AMC equity is 25.71%. Assuming that the proceeds from any increases in debt are paid out to equity holders, what cash flows do the equity holders expect to receive in one year? At what rate are those cash flows expected to grow using the FTE method? (Hold all intermediate calculations to at least 6 decimal places and round to the…
Mako Industries is considering changes in its working capital policies to improve its cash flow cycle. Mako's sales last year were $6.0 million (all on credit), and its net profit margin was 8%. Its inventory turnover was 7.0 times during the year, and its DSO was 45 days. Its annual cost of goods sold was $4.20 million. The firm had fixed assets totaling $600,000. Mako's payables deferral period is 30 days. Suppose Mako's managers believe the annual inventory turnover can be raised to 8 times without affecting sale or profit margins. What would Mako's ROA have been if the inventory turnover had been 8 for the year? O 25.74% O 21.03% O 24.33% O 26.57%
Price Corporation is considering selling to a group of new customers and creating new annual sales of $240,000. 3% will be uncollectible. The collection cost on all accounts is 6% of new sales, the cost of producing and selling is 83% of sales, and the firm is in the 22% tax bracket. What is the profit on new sales?
H3. Please show proper step by step calculation
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The XYZ Corporation expects to have sales of $15 million this year. Costs other than depreciation are expected to be 80% of sales, and depreciation is expected to amount to $1 million. XYZ is using $5 million debt at 10%. All sales revenues will be collected in cash, and costs other than depreciation must be paid for during the year. XYZ's federalolus - state tax rate is 30%. What is XYZ's expected cash flow from operations? (Assume no other changes occurred.)
Thompson Trucking has $9 billion in assets, and its tax rate25%. Its basic earning power (BEP) ratio is 20%, and its returnon assets (ROA) is 5.25%. Whatis its time interest earned (TIF)ratio? Round you answer to twodecimal places.
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The Carioco Company has two divisions that operate independently of one another. The financial data for the year 2022 reported the following results: Alpha Beta Sales $3,000,000 $2,500,000 Operating income 750,000 550,000 Taxable income 650,000 375,000 Investment 6,000,000 5,000,000 The company's desired rate of return is 10%. Income is defined as operating income. Required: What are the respective residual incomes for the Alpha and Beta Divisions? a. $150,000 and $50,000 b. $150,000 and $30,000 c. $50,000 and a negative $150,000 d. $30,000 and $50,000
The Berndt Corporation expects to have sales of $15 million. Costs other than depreciation are expected to be 80% of sales, and depreciation is expected to be $1.5 million. All sales revenues will be collected in cash, and costs other than depreciation must be paid for during the year. Brendt's federal-plus-state tax rate is 40%. Berndt has no debt. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. X THAAL Open spreadsheet a. Set up an income statement. What is Berndt's expected net cash flow? Enter your answer in dollars. For example, an answer of $1.2 million should be entered as 1,200,000. Round your answer to the nearest dollar. $ b. Suppose Congress changed the tax laws so that Berndt's depreciation expenses doubled. No changes in operations occurred. What is Berndt's expected net cash flow? Round your answer to the nearest dollar. $ c. Now suppose that Congress changed the…
Victoria Enterprises expects earnings before interest and taxes (EBIT) next year of $2.1 million. Its depreciation and capital expenditures will both be $286,000, and it expects its capital expenditures to always equal its depreciation. Its working capital will increase by $47,000 over the next year. Its tax rate is 35%. If its WACC is 10% and its FCFs are expected to increase at 5% per year in perpetuity, what is its enterprise value? The company's enterprise value is $ (Round to the nearest dollar.)

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