Noah’s ark video games expects sales to grow by 25% next year. Assume that it pays out 95% of its net income. Using the following statements and the percent of sales method, forecast net income **Net Income**98,800---**Balance Sheet****Year 0****Assets:**- **Cash and Equivalents:** 25,000- **Accounts Receivable:** 12,000- **Inventories:** 5,000**Total Current Assets:** 42,000- **Property, Plant and Equipment:** 120,000**Total Assets:** 162,000---**Liabilities and Equity:**- **Accounts Payable:** 45,000- **Debt:** 48,000**Total Liabilities:** 93,000- **Stockholders' Equity:** 69,000**Total Liabilities and Equity:** 162,000 ### Financial Statements Overview#### Income Statement - Year 0- **Sales:** $320,000- **Costs Except Depreciation:** ($150,000)- **EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization):** $170,000- **Depreciation:** ($15,000)- **EBIT (Earnings Before Interest and Taxes):** $155,000- **Interest Expense (net):** ($3,000)- **Pretax Income:** $152,000- **Income Tax:** ($53,200)- **Net Income:** $98,800#### Balance Sheet - Year 0**Assets:**- **Cash and Equivalents:** $25,000- **Accounts Receivable:** $12,000- **Inventories:** $5,000- **Total Current Assets:** $42,000- **Property, Plant and Equipment:** $120,000### Detailed Diagram Explanation#### Income StatementThe Income Statement is a financial document that provides a summary of a company's revenues and expenses over a specific period, usually a fiscal year or quarter. 1. **Sales:** This represents the total revenue generated by the company from its business operations ($320,000).2. **Costs Except Depreciation:** These are the operational costs incurred by the company, excluding depreciation ($150,000).3. **EBITDA:** This metric indicates the earnings before interest, taxes, depreciation, and amortization, showing the company's operational profitability ($170,000).4. **Depreciation:** This is the allocation of the cost of tangible assets over their useful lives ($15,000).5. **EBIT:** This is the earnings before interest and taxes, subtracting depreciation from EBITDA ($155,000).6. **Interest Expense (net):** This includes any interest paid on debt, minus any interest income ($3,000).7. **Pretax Income:** This is the income before accounting for income taxes ($152,000).8. **Income Tax:** This is the tax levied on the company's earnings ($53,200).9. **Net Income:** This is the profit after all expenses, including taxes, have been deducted from revenues ($98,800).#### Balance SheetThe Balance Sheet outlines the company's assets, liabilities, and shareholder equity at a specific point in time.**Assets:

Forecast net income is dependent on the existing figure of financial statement and growth rate of…

Income Statement Year 0 Sales 320,000 Costs Except Depreciation (150,000) EBITDA 170,000 Depreciation (15,000) 155,000 (3,000) EBIT Interest Expense (net) Pretax Income 152,000 Income Tax (53,200) Net Income 98,800

Income Statement Year 0 Sales 320,000 Costs Except Depreciation (150,000) EBITDA 170,000 Depreciation (15,000) 155,000 (3,000) EBIT Interest Expense (net) Pretax Income 152,000 Income Tax (53,200) Net Income 98,800

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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Revenues -Cost of Goods Sold -Depreciation =EBIT -Taxes (20%) -Unlevered net income +Depreciation -Additions to Net Working Capital -Capital Expenditures =Free Cash Flow Year 0 OA. by 38% OB. by 64% OC. by 51% OD. by 32% Year 2 475,000 -155,000 - 95,000 Year 1 475,000 - 155,000 - 95,000 225,000 225,000 225,000 -45,000 -45,000 -45,000 - 300,000 Year 3 475,000 - 155,000 - 95,000 180,000 95,000 - 20,000 255,000 255,000 Visby Rides, a livery car company, is considering buying some new luxury cars. After extensive research, they come up with the above estimates of free cash flow from this project. Visby learns that a competitor is thinking of offering similar services, thus reducing Visby's sales. By how much could sales fall before the net present value (NPV) was zero, given that the cost of capital is 10%, and that cost of goods sold is 45% of revenues? 180,000 95,000 - 20,000 180,000 95,000 - 20,000 255,000
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please answer a and b
Prepare a common size income statement given the following information: Revenues = $100,000 COGS = $43,000 SG&A = $22,000 Depreciation = $10,000 Interest Owed = $5,000 Tax Rate = 40%
Data for item nos. 24 & 25 Di Ka Na Mahal Company reported the following information during the first year of operations: P 9,000,000 1,000,000 1,500,000 2,000,000 30% Pretax financial income Nontaxable interest received Long-term loss accrual in excess of deductible amount Tax depreciation in excess of financial depreciation Income tax rate 24. What is the current tax expense? A. P2,250,000 C. P1,800,000 B. P2,700,000 D. P2,550,000 25. What is the deferred tax asset at the year-end? В. Р450,000 С. Р750,000 A. P600,000 D. P150,000
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Revenues - Cost of Goods Sold - Depreciation =EBIT - Taxes (20%) =Unlevered net income +Depreciation - Additions to Net Working Capital - Capital Expenditures =Free Cash Flow Year 0 OA. by 35% OB. by 41% OC. by 69% O D. by 55% Year 1 500,000 - 300,000 Year 2 500,000 - - 100,000 -100,000 165,000-165,000 235,000 -47,000 235,000 -47,000 Year 3 500,000 -165,000 -100,000 188,000 188,000 100,000 100,000 - 20,000 - 20,000 268,000 268,000 Visby Rides, a livery car company, is considering buying some new luxury cars. After extensive research, they come up with the above estimates of free cash flow from this project. Visby learns that a competitor is thinking of offering similar services, thus reducing Visby's sales. By how much could sales fall before the net present value (NPV) was zero, given that the cost of capital is 8%, and that cost of goods sold is 45% of revenues? 235,000 - 47,000 188,000 100,000 - 20,000 268,000
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