10. [EXCEL] Percent of sales: Given the data for Cattail Corporation in Problem 9, if you assume that all balance sheet items also vary with the change in sales, develop a pro forma balance sheet for Cattail for the next fiscal year. Assuming that the firm did not sell or repurchase stock, what is the cash dividend implied by the pro forma income statement and balance sheet? Problem 9: [EXCEL] Percent of sales: Cattail Corporation's financial statements for the fiscal year just ended are shown below: Cattail Corporation Financial Statements for the Fiscal Year Just Ended Income Statement Balance Sheet Net Sales $ 1,500,000 Assets $ 700,000 Debt $ 600,000 Costs 350,000 Equity 100,000 Net Income $ 1,150,000 Total $ 700,000 Total $ 700,000 Cattail management expects sales to increase by 14 percent next year. Assume that the financial statement accounts vary directly with changes in sales and that management has no financing plan at this time. Given this information, develop a pro forma income statement for Cattail for the next fiscal year.
Dividend Valuation
Dividend refers to a reward or cash that a company gives to its shareholders out of the profits. Dividends can be issued in various forms such as cash payment, stocks, or in any other form as per the company norms. It is usually a part of the profit that the company shares with its shareholders.
Dividend Discount Model
Dividend payments are generally paid to investors or shareholders of a company when the company earns profit for the year, thus representing growth. The dividend discount model is an important method used to forecast the price of a company’s stock. It is based on the computation methodology that the present value of all its future dividends is equivalent to the value of the company.
Capital Gains Yield
It may be referred to as the earnings generated on an investment over a particular period of time. It is generally expressed as a percentage and includes some dividends or interest earned by holding a particular security. Cases, where it is higher normally, indicate the higher income and lower risk. It is mostly computed on an annual basis and is different from the total return on investment. In case it becomes too high, indicates that either the stock prices are going down or the company is paying higher dividends.
Stock Valuation
In simple words, stock valuation is a tool to calculate the current price, or value, of a company. It is used to not only calculate the value of the company but help an investor decide if they want to buy, sell or hold a company's stocks.
10. [EXCEL] Percent of sales: Given the data for Cattail Corporation in Problem 9, if you assume that all
Problem 9:
[EXCEL] Percent of sales: Cattail Corporation's financial statements for the fiscal year just ended are shown below:
| Cattail Corporation | ||||||||
| Financial Statements for the Fiscal Year Just Ended | ||||||||
| Income Statement | Balance Sheet | |||||||
| Net Sales | $ 1,500,000 | Assets | $ 700,000 | Debt | $ 600,000 | |||
| Costs | 350,000 | Equity | 100,000 | |||||
| Net Income | $ 1,150,000 | Total | $ 700,000 | Total | $ 700,000 | |||
| Cattail management expects sales to increase by 14 percent next year. Assume that the financial statement accounts vary directly with changes in sales and that management has no financing plan at this time. Given this information, develop a pro forma income statement for Cattail for the next fiscal year. |
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