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 property plant and equipment ### Financial Statements Overview#### Income StatementThe income statement for Year 0 presents the following information:- **Sales**: $320,000- **Costs Except Depreciation**: ($150,000)- **EBITDA**: $170,000- **Depreciation**: ($15,000)- **EBIT**: $155,000- **Interest Expense (net)**: ($3,000)- **Pretax Income**: $152,000- **Income Tax**: ($53,200)- **Net Income**: $98,800#### Explanation:- **Sales** represents the total revenue generated.- **Costs Except Depreciation** includes all operating expenses other than depreciation, shown as a negative amount because it is an expense.- **EBITDA** (Earnings Before Interest, Taxes, Depreciation, and Amortization) is calculated as Sales minus Costs Except Depreciation.- **Depreciation** is an expense reflecting the reduction in value of the company’s tangible fixed assets over time.- **EBIT** (Earnings Before Interest and Taxes) is obtained by subtracting Depreciation from EBITDA.- **Interest Expense (net)** represents the net cost of interest, typically on borrowed funds.- **Pretax Income** is calculated by subtracting Interest Expense from EBIT.- **Income Tax** represents the estimated tax liability.- **Net Income** is the profit remaining after subtracting Income Tax from Pretax Income.#### Balance SheetThe balance sheet for Year 0 provides a snapshot of the company's financial position:- **Assets**: - **Cash and Equivalents**: $25,000 - **Accounts Receivable**: $48,000This information helps users understand the company's resource availability and operational performance during Year 0. The balance sheet specifically highlights the liquid assets of the company. The income statement gives a breakdown of profit and expense components leading to the net income figure.For a more comprehensive analysis, users typically look at additional details in the balance sheet, such as liabilities and equity, which are not provided in this particular image. ### Financial Overview and Balance SheetThis section provides a summarized overview of a company's financial standing, specifically highlighting the net income and detailed balance sheet for Year 0.#### Net Income- The net income for the period is $98,800.#### Balance Sheet for Year 0**Assets**- **Cash and Equivalents**: $25,000 - This represents the total of all cash or cash-equivalent assets that are readily available for use. - **Accounts Receivable**: $12,000 - Represents the outstanding bills or invoices that customers owe to the company. - **Inventories**: $5,000 - This is the total value of the products or raw materials that the company has in stock. - **Total Current Assets**: $42,000 - Sum of all short-term assets that are expected to be converted into cash within the year.- **Property, Plant and Equipment**: $120,000 - This encompasses the value of all tangible, long-term assets such as buildings, machinery, and land.- **Total Assets**: $162,000 - Represents the sum of the company's current and long-term assets.**Liabilities and Equity**- **Accounts Payable**: $45,000 - Debts and bills that the company owes to suppliers and creditors.- **Debt**: $48,000 - This includes all types of borrowings such as loans and bonds that the company is obligated to repay.- **Total Liabilities**: $93,000 - The sum of accounts payable and all other debts.- **Stockholders' Equity**: $69,000 - Represents the owners' claim after all liabilities have been settled. It includes retained earnings and common stock.- **Total Liabilities and Equity**: $162,000 - This equals the total assets, ensuring that the balance sheet is balanced as per accounting principles.The balance sheet is a critical financial statement providing an at-a-glance view of a company’s financial health by detailing its assets, liabilities, and equity at a specific point in time.

Property plant Equipment in year 0 = 120000 Sales value in year 0 = 320000 % of Property plant…

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 property plant and equipment

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 property plant and equipment

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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