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 $ ________________ 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 assets $ __________ Total liabilities and equity $__________

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 $ 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 assets $ Total liabilities and equity $____

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

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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 $ ________________

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 assets $ __________ Total liabilities and equity $__________

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