CHAPTER 10: FINANCIAL FORECASTING AND PLANNING QUESTION AND ANSWER ST-1. (Financial forecasting) Use the percent of sales method to prepare a pro forma income statement for Calico Sales Co. Inc. Projected sales for next year equal $4 million. Cost of goods sold equals 70 percent of sales, administrative expense equals $500,000, and depreciation expense is $300,000. Interest expense equals $50,000, and income is taxed at a rate of 40 percent. The firm plans to spend $200,000 during the period to renovate its office facility and will retire $150,000 in notes payable. Finally, selling expense equals 5 percent of sales.

CHAPTER 10: FINANCIAL FORECASTING AND PLANNING QUESTION AND ANSWER ST-1. (Financial forecasting) Use the percent of sales method to prepare a pro forma income statement for Calico Sales Co. Inc. Projected sales for next year equal $4 million. Cost of goods sold equals 70 percent of sales, administrative expense equals $500,000, and depreciation expense is $300,000. Interest expense equals $50,000, and income is taxed at a rate of 40 percent. The firm plans to spend $200,000 during the period to renovate its office facility and will retire $150,000 in notes payable. Finally, selling expense equals 5 percent of sales.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

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1 Lemon Auto Wholesalers had sales of $1,400,000 last year, and cost of goods sold represented 77 percent of sales. Selling and administrative expenses were 13 percent of sales. Depreciation expense was $10,000 and interest expense for the year was $9,000. The firm's tax rate is 30 percent. a. Compute earnings after taxes. Lemon Auto Wholesalers Income Statement $ $ $ 0 Anali 0 0 0 b-1. Assume the firm hires Ms. Carr an efficiency expert as a consultant. She suggests that by increasing selling and administrative
Consider a firm with an annual net income of $20 million, revenue of $60 million and cost of goods sold of $20 million. If the balance sheet amounts show $2 million of inventory and $500,000 of property, plant & equipment, what is the inventory turnover? 12.50 10.00 40.00 8.00
m.Debt ratio is ____________%. n.Debt to Equity ratio is ___________%. o.Net profit margin is _____%.
A) Obtain the EFN if the firm plans to have sales growth equal to 20% B) Use your fianncial model to estimate the internal growth rate
24. Following are a company's income statement at the end of the last year (year 0) and coming year (year 1). Each year, the company's accounts receivable need to be main- tained at 5% of sales. The company's inventory and accounts payable do not change. Capital expenditure in year 1 is $10,000. Year Sales Depreciation EBIT Taxes (a) What is the free cash flow in year 17 1 85,000 92,000 20,000 22,000 17,000 19,500 3,500 3,700 0 (b) The company's business is mature, so it is expected to generate the same amount of free cash flow every year forever. The firm-specific discount rate is 7%, and the risk-free rate is 2%. What is the enterprise value of the company? (c) The company has $150,000 in cash and $50,000 in debt. In addition, it has 7000 shares outstanding. What is the company's stock price per share?
1. Suppose you are given the following information for Bayside Bakery: sales = $30,000; addition to retained earnings = $4,221; dividends paid = $469; interest expense = $1,300; tax rate = 30 percent. What is the EBIT?
Your company has sales of $97,200 this year and cost of goods sold of $71,200. You forecast sales to increase to $113,100 next year. Using the percent of sales method, forecast next year's cost of goods sold.
Zeebadee Inc. wants to forecast free cash flow to equity (FCFE) using the percent-of- sales method. Prior year sales were $10,000. What is FCFE in Year 5 based on the information presented below? Sales growth Profit margin Net FCInv (% of Sales) WCInv (% of Sales) DR $2,335.93 $1,687.06 $1,008.00 $1,557.29 Year 1 Year 4 Year 2 Year 3 14.00% 12.00% 10.00% 10.00% 9.00% 10.00% 12.00% 12.00% 8.00% 8.00% 8.00% 6.00% 3.00% 3.00% 2.00% 3.00% 40.00% 40.00% 40.00% 40.00% Year 5 5.00% 12.00% 3.00% 1.00% 40.00% 4
Vikings Inc., is developing a pro forma income statement for the coming year. The chief financial officer estimates that sales will be $150,000,000. If gross profits are historically 36% of sales, what is the expected cost of goods sold (in dollars)? a) $36,000,000 b) $54,000,000 c) $64,000,000 d) $96,000,000 NOTE: In your Excel spreadsheet, all calculations must be included
Supply the missing components of the Statement of Financial Position and Sales information using the following financial data:Debt ratio: 50%Current ratio: 1.8×Total assets turnover: 1.5×Days sales outstanding: 36.5 days*Gross profit margin on sales: (Sales − Cost of goods sold)/Sales = 25%Inventory turnover ratio: 5×*Calculation is based on a 365-day year.Statement of Financial Position(in Thousands)Cash ________Accounts payable_________Accounts receivable ________Long-term debt PhP120,000Inventories ________Common stock_________Fixed assets ________Retained earnings 195,000Total assets PhP600,000Total liabilities and equity _________Sales _______Cost of goods sold _________
What is the gross profit declined due to increase in cost in the amount? The management of Bataan Corporation ask you to submit an analysis of the increase in their gross profit in2021 based on their past two-year comparative income statements which show: 2021 2020 Sales 1,237,500 1,000,000 950,000 287,000 Cost of sales 800,000 Gross profit 200,000 The only known factor given is the sales price increased 12.5% beginning January 2021.
Use the table for the question(s) below. FCF Forecast ($ million) Year Sales 1 270 12.5% 32.40 Less: Income Tax (37%) (6.48) Less Increase in NWC (12% of Change in Sales) 3,60 Free Cash Flow 22.32 Growth versus Prior Year EBIT (10% of Sales) 0 240 OA. $4.27 OB. $7.47 OC. $12.8 OD. $5.12 2 290 7.4% 34.80 (6.96) 2.40 25.44 ACCE 3 310 6.9% 37.20 (7.44) 2.40 27.36 Banco Industries expect sales to grow at a rapid rate over the next 3 years, but settle to an industry growth rate of 4% in year 4. The spreadsheet above shows a simplified pro forma for Banco Industries. Banco industries has a weighted average cost of capital of 10%, $30 million in cash, $60 million in debt, and 18 million shares outstanding. If Banco Industries can reduce its operating expenses so that EBIT becomes 12% of sales, by how much will its stock price increase? 4 325.5 5.0% 39.06 (7.81) 1.86 29.388

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