Consider the following income statement for the Heir Jordan Corporation: HEIR JORDAN CORPORATIONIncome Statement Sales $ 47,600 Costs 35,600 Taxable income $ 12,000 Taxes (25%) 3,000 Net income $ 9,000 Dividends $ 2,505 Addition to retained earnings 6,495 The balance sheet for the Heir Jordan Corporation follows. HEIR JORDAN CORPORATIONBalance Sheet Assets Liabilities and Owners’ Equity Current assets Current liabilities Cash $ 2,050 Accounts payable $ 2,400 Accounts receivable 4,700 Notes payable 4,500 Inventory 6,400 Total $ 6,900 Total $ 13,150 Long-term debt $ 25,000 Owners’ equity Fixed assets Common stock and paid-in surplus $ 15,000 Net plant and equipment $ 36,000 Retained earnings 2,250 Total $ 17,250 Total assets $ 49,150 Total liabilities and owners’ equity $ 49,150 Prepare a pro forma balance sheet, assuming an increase in sales of 13 percent, no new external debt or equity financing, and a constant payout ratio. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Calculate the EFN. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Consider the following income statement for the Heir Jordan Corporation: HEIR JORDAN CORPORATIONIncome Statement Sales $ 47,600 Costs 35,600 Taxable income $ 12,000 Taxes (25%) 3,000 Net income $ 9,000 Dividends $ 2,505 Addition to retained earnings 6,495 The balance sheet for the Heir Jordan Corporation follows. HEIR JORDAN CORPORATIONBalance Sheet Assets Liabilities and Owners’ Equity Current assets Current liabilities Cash $ 2,050 Accounts payable $ 2,400 Accounts receivable 4,700 Notes payable 4,500 Inventory 6,400 Total $ 6,900 Total $ 13,150 Long-term debt $ 25,000 Owners’ equity Fixed assets Common stock and paid-in surplus $ 15,000 Net plant and equipment $ 36,000 Retained earnings 2,250 Total $ 17,250 Total assets $ 49,150 Total liabilities and owners’ equity $ 49,150 Prepare a pro forma balance sheet, assuming an increase in sales of 13 percent, no new external debt or equity financing, and a constant payout ratio. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Calculate the EFN. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
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
Problem 1PS
Related questions
Question
| Consider the following income statement for the Heir Jordan Corporation: |
| HEIR JORDAN CORPORATION Income Statement |
|||||||
| Sales | $ | 47,600 | |||||
| Costs | 35,600 | ||||||
| Taxable income | $ | 12,000 | |||||
| Taxes (25%) | 3,000 | ||||||
| Net income | $ | 9,000 | |||||
| Dividends | $ | 2,505 | |||||
| Addition to |
6,495 | ||||||
| The |
| HEIR JORDAN CORPORATION Balance Sheet |
|||||||
| Assets | Liabilities and Owners’ Equity | ||||||
| Current assets | Current liabilities | ||||||
| Cash | $ | 2,050 | Accounts payable | $ | 2,400 | ||
| Accounts receivable | 4,700 | Notes payable | 4,500 | ||||
| Inventory | 6,400 | Total | $ | 6,900 | |||
| Total | $ | 13,150 | Long-term debt | $ | 25,000 | ||
| Owners’ equity | |||||||
| Fixed assets | Common stock and paid-in surplus | $ | 15,000 | ||||
| Net plant and equipment | $ | 36,000 | Retained earnings | 2,250 | |||
| Total | $ | 17,250 | |||||
| Total assets | $ | 49,150 | Total liabilities and owners’ equity | $ | 49,150 | ||
|
Prepare a pro forma balance sheet, assuming an increase in sales of 13 percent, no new external debt or equity financing, and a constant payout ratio. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) |
|
Calculate the EFN. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 5 steps with 5 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education