### Financial Statement Analysis**Income Statement and Balance Sheet Overview**This section presents a detailed breakdown of the company's financial performance and position, crucial for educational purposes. #### Income Statement- **Sales:** $19,400- **Costs:** $13,200- **Taxable Income:** $6,200- **Taxes (22%):** $1,364 - **Net Income:** $4,836 #### Balance Sheet- **Current Assets:** $11,800- **Fixed Assets:** $28,350 - **Total Assets:** $40,150 - **Debt:** $16,000 - **Equity:** $24,150 - **Total Liabilities and Equity:** $40,150 **Key Assumptions:**- Assets and costs are directly proportional to sales.- Debt and equity levels are non-proportional to sales.- The company follows a strict 55% dividend payout ratio.**Internal Growth Rate Calculation:**To understand how the company can grow based on its current financial operations without external financing, we calculate the internal growth rate. This involves understanding retained earnings and how they contribute to growth.**Formula and Input:**The internal growth rate can be calculated using the formula:\[ \text{Internal growth rate} = \frac{\text{Return on Assets} \times \text{Retention Ratio}}{1 - (\text{Return on Assets} \times \text{Retention Ratio})} \]1. **Net Income:** $4,8362. **Dividend Payout Ratio:** 55%3. **Retention Ratio:** $ 1 - \text{Dividend Payout Ratio} = 1 - 0.55 = 0.45 $4. **Total Assets:** $40,1505. **Return on Assets (ROA):** $ \frac{\text{Net Income}}{\text{Total Assets}} = \frac{4,836}{40,150} \approx 0.1205 $6. **Internal Growth Rate:**\[ \text{Internal growth rate} = \frac{0.1205 \times 0.45}{1 - (0.1205 \times 0.45)} \]**Interactive Calculation Tool:**A tool is provided for students to input necessary values and calculate the internal growth rate, enhancing their practical understanding of financial concepts.**Internal Growth

In order to compute the internal growth rate, we first required to compute the ROA, which is:

Income Statement Balance Sheet Current Sales $19,400 $ 11,800 Debt $16,000 assets Costs 13,200 Fixed assets 28,350 Equity 24,150 Taxable income$ 6,200 Total $ 40,150 Total $ 40,150 Taxes (22%) 1,364 Net income $ 4,836 Assets and costs are proportional to sales. Debt and equity are not. The company maintains a constant 55 percent dividend payout ratio. What is the internal growth rate?

Income Statement Balance Sheet Current Sales $19,400 $ 11,800 Debt $16,000 assets Costs 13,200 Fixed assets 28,350 Equity 24,150 Taxable income$ 6,200 Total $ 40,150 Total $ 40,150 Taxes (22%) 1,364 Net income $ 4,836 Assets and costs are proportional to sales. Debt and equity are not. The company maintains a constant 55 percent dividend payout ratio. What is the internal growth rate?

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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40. JoelEmbi, Inc. has an ROA (return on assets) of 15.2 percent, total assets of $4,500,000 and a net profit margin of 7.6 percent. What are JoelEmbi, Inc.'s annual sales? Enter your answer a whole number (i.e., rounded to zero decimal places. 41. JimmyButle, LLC. has a debt-to-total assets ratio of 39.6%. What is the company's debt-to-equity ratio? Enter your answer as a ratio (that is, do not convert to a percent), rounded to 2 decimal places. 42. JohCol, Inc has a debt ratio of 27.0% and ROE = 20.2%. What is JohCol, Inc.'s ROA? Enter your answer as a percent rounded to 1 decimal place. Enter 43. PauGeo, Inc. has an ROA of 18.2% and a debt/equity ratio of 0.83. The firm's ROE is answer as a percent rounded to 1 decimal place. 44. Assume that TraeYoung, Inc. has: Debt ratio 60% ● Net profit margin = 15.2% ● Return on assets (ROA) = 52% Find Trae Young's Total Asset Turnover ratio. Enter answer as a ratio (that is, do not convert to a percent), rounded to 2 decimal places.
The following is Firm Y's current statement of comprehensive income. If the firm is currently operating at 75% capacity, how much must sales increase before Firm Y needs to buy new fixed assets? Sales $50,000 CoGS 30,000 EBDIT 20,000 Depreciation 10,000 EBIT 10,000 Interest expense 5,000 Taxable income 5,000 Taxes (35%) 1,750 Net Income 3,250 Dividends 975 Multiple Choice 50% 75% 30% 66.67% 33.33%
am. 13.
The most recent financial statements for Crosby, Incorporated, follow. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales. Assume the firm is operating at full capacity and the debt-equity ratio is held constant. CROSBY, INCORPORATED 2020 Income Statement Sales $ 756,000 Costs 612,000 Other expenses 25,500 Earnings before interest and taxes $ 118,500 Interest paid 11,200 Taxable income $ 107,300 Taxes (23%) 24,679 Net income $ 82,621 Dividends $ 41,340 Addition to retained earnings 41,281 CROSBY, INCORPORATED Balance Sheet as of December 31, 2020 Assets Liabilities and Owners’ Equity Current assets Current liabilities Cash $ 24,540 Accounts payable $ 58,600 Accounts receivable 33,890 Notes payable 15,500…
You've collected the following information about Caccamisse, Incorporated: Sales $ 155,000 $12,200 Net income Dividends $ 8,100 Total debt $ 62,000 Total equity $53,000 a. What is the sustainable growth rate for the company? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. If it does grow at this rate, how much new borrowing will take place in the coming year, assuming a constant debt-equity ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What growth rate could be supported with no outside financing at all? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Sustainable growth rate b. Additional borrowing c. Internal growth rate % %
Berman & Jaccor Corporation's current sales and partial balance sheet are shown below. This year Sales $1,000 Balance Sheet: Assets Cash $150 Short-term investments $140 Accounts receivable $300 Inventories $300 Total current assets $890 Net fixed assets $600 Total assets $1,490 Sales are expected to grow by 12% next year. Assuming no change in operations from this year to next year, what are the projected total operating assets? Do not round intermediate calculations. Round your answer to the nearest dollar.
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