Munson Communications Company has just reported earnings for the year ended June 30, 2011. Below are the firm’s income statement and balance sheet. The Company had a 55 percent dividend payout ratio for the last 10 years and does not plan to change this policy. Based on internal forecasts, the company expects the demand for its products to grow at a rate of 21 percent for the next year and has projected the sales growth for 2012 to be 21 percent. Assume that equity accounts and long-term debt do not vary directly with sales, but change when retained earnings change or additional capital is issued. Munson Communications Company Balance Sheet as of June 30, 2011 Assets: Liabilities and Stockholders’ Equity: Cash $1,728,639 Accounts payables $4,666,673 Accounts receivables 3,009,421 Notes payables 2,507,094 Inventories 11,492,993 Total current assets $16,231,054 Total current liabilities $7,173,767 Net fixed assets 22,380,636 Long-term debt 13,345,242 Other assets 1,748,906 Common stock 10,165,235 Retained earnings 9,676,351 Total assets $40,360,595 Total liabilities and equity $40,360,595 Munson Communications Company Income Statement for the Fiscal Year Ended June 30, 2011 Revenues $79,722,581 Costs 59,358,499 EBITDA $20,364,082 Depreciation 7,318,750 EBIT $13,045,332 Interest 3,658,477 EBT $9,386,855 Taxes (35%) 3,285,399 Net income $6,101,456 a. What is the firm’s internal growth rate (IGR)? (Round answer to 2 decimal places, e.g. 15.25%.) Munson’s internal growth rate (IGR) is _____________%. b. What is the firm’s sustainable growth rate (SGR)? (Round answer to 2 decimal places, e.g. 15.25%.) Munson’s sustainable growth rate (SGR) is _______________%. c. What is the external financing needed (EFN) to accommodate the expected growth? (Round answer to nearest whole dollar, e.g. 5,275.) Munson’s external financing needed (EFN) to accommodate the expected growth is $ ____________ . d. Construct the firm’s 2012 pro forma financial statements below under the assumption that all external financing will be done with long-term debt. (Round answers to nearest whole dollar, e.g. 5,275.) Munson Communications Company Income Statement Revenues $__________________

Munson Communications Company has just reported earnings for the year ended June 30, 2011. Below are the firm’s income statement and balance sheet. The Company had a 55 percent dividend payout ratio for the last 10 years and does not plan to change this policy. Based on internal forecasts, the company expects the demand for its products to grow at a rate of 21 percent for the next year and has projected the sales growth for 2012 to be 21 percent. Assume that equity accounts and long-term debt do not vary directly with sales, but change when retained earnings change or additional capital is issued. Munson Communications Company Balance Sheet as of June 30, 2011 Assets: Liabilities and Stockholders’ Equity: Cash $1,728,639 Accounts payables $4,666,673 Accounts receivables 3,009,421 Notes payables 2,507,094 Inventories 11,492,993 Total current assets $16,231,054 Total current liabilities $7,173,767 Net fixed assets 22,380,636 Long-term debt 13,345,242 Other assets 1,748,906 Common stock 10,165,235 Retained earnings 9,676,351 Total assets $40,360,595 Total liabilities and equity $40,360,595 Munson Communications Company Income Statement for the Fiscal Year Ended June 30, 2011 Revenues $79,722,581 Costs 59,358,499 EBITDA $20,364,082 Depreciation 7,318,750 EBIT $13,045,332 Interest 3,658,477 EBT $9,386,855 Taxes (35%) 3,285,399 Net income $6,101,456 a. What is the firm’s internal growth rate (IGR)? (Round answer to 2 decimal places, e.g. 15.25%.) Munson’s internal growth rate (IGR) is _____%. b. What is the firm’s sustainable growth rate (SGR)? (Round answer to 2 decimal places, e.g. 15.25%.) Munson’s sustainable growth rate (SGR) is _%. c. What is the external financing needed (EFN) to accommodate the expected growth? (Round answer to nearest whole dollar, e.g. 5,275.) Munson’s external financing needed (EFN) to accommodate the expected growth is $ . d. Construct the firm’s 2012 pro forma financial statements below under the assumption that all external financing will be done with long-term debt. (Round answers to nearest whole dollar, e.g. 5,275.) Munson Communications Company Income Statement Revenues $____________

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

See similar textbooks

Related questions

Question

Munson Communications Company Balance Sheet as of June 30, 2011
Assets:	Liabilities and Stockholders’ Equity:
Cash	$1,728,639	Accounts payables	$4,666,673
Accounts receivables	3,009,421	Notes payables	2,507,094
Inventories	11,492,993
Total current assets	$16,231,054	Total current liabilities	$7,173,767

Net fixed assets	22,380,636	Long-term debt	13,345,242
Other assets	1,748,906	Common stock	10,165,235
		Retained earnings	9,676,351
Total assets	$40,360,595	Total liabilities and equity	$40,360,595

Munson Communications Company Income Statement for the Fiscal Year Ended June 30, 2011
Revenues	$79,722,581
Costs	59,358,499
EBITDA	$20,364,082
Depreciation	7,318,750
EBIT	$13,045,332
Interest	3,658,477
EBT	$9,386,855
Taxes (35%)	3,285,399
Net income	$6,101,456

a. What is the firm’s internal growth rate (IGR)? (Round answer to 2 decimal places, e.g. 15.25%.)

Munson’s internal growth rate (IGR) is

_____________%.

b. What is the firm’s sustainable growth rate (SGR)? (Round answer to 2 decimal places, e.g. 15.25%.)

Munson’s sustainable growth rate (SGR) is

_______________%.

c. What is the external financing needed (EFN) to accommodate the expected growth? (Round answer to nearest whole dollar, e.g. 5,275.)

Munson’s external financing needed (EFN) to accommodate the expected growth is $ ____________

d. Construct the firm’s 2012 pro forma financial statements below under the assumption that all external financing will be done with long-term debt. (Round answers to nearest whole dollar, e.g. 5,275.)

Munson Communications Company
Income Statement

Revenues $__________________

Costs _________________

EBITDA $ _____________

Depreciation ______________

EBIT $ ________________

Interest ____________

EBT $ _______________

Taxes (35%) ________________

Net income $ _______________

Munson Communications Company
Pro Forma Balance Sheet for Year Ended June 30, 2011
Assets:
Liabilities and Stockholders' Equity:
Cash
Accounts payables
Accounts receivables
Notes payables
Inventories
Total current assets
Total current liabilities
Net fixed assets
Long-term debt
Other assets
Common stock
Retained earnings
Total liabilities and equity a
Total assets

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

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.