on the pro forma income statement sales are expected to increase by 23%. If the net margin is expected to increase by 18% and net profit last year was 100 million, what is the net profit projected to be? A) 118 million. B)123 million. C )158 million D) 141 million

on the pro forma income statement sales are expected to increase by 23%. If the net margin is expected to increase by 18% and net profit last year was 100 million, what is the net profit projected to be? A) 118 million. B)123 million. C )158 million D) 141 million

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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Use the table for the question(s) below FCF Forecast (5 million) Year Sales Growth vs. Prior Year EBIT (10% of Sales) Less: Income Tax (37%) 0 240 Less: Increase in NWC (12% of Change in Sales). Free Cash Flow OA. $8.64 OB. $17.28 OC. $9.60 OD. $4.80 1 270 12.5% 27,00 (0.99) 3.6. 13.41 2 290 7.4% 29,00 10.73 2.4. 15.87 3 310 ETTE 6.9% 31.00 11.47 24 17.13 325.5 5.0% 32.55 12.44 Banco Industries expect sales to grow at a rapid rate over the next three years, but settle to an industry growth rate of 4% in year 4. The spreadsheet above shows a simplified pro forma for Banco Industries. If Banco industries has a weighted average cost of capital of 12%, $30 million in cash, $60 million in debt, and 18 milion shares outstanding, which of the following is the best estimate of Banco's stock price at the start of year 17 1.86 18.65
2. Conceptual Connection: Compute net profit margin for ERS. Round your answer to one decimal place. 6.6 % A If ERS is able to increase its service revenue by $100,000, what should be the effect on future income? If ERS had an incremental increase in revenue of $100,000, based on the net profit margin computed, what is the additional potential profit? 3. Conceptual Connection: Assume that ERS net profit margin was 8.5% for 2018. As an investor, what conclusions might you draw about ERS' future profitability? A declining profit margin implies that ERS is having difficulty maintaining control over its expenses.
Teal Company has a DOL of 120%. If sales were to increase by 5%, what is the expected impact on Earnings Before Interest and Tax (EBIT)?
Cochrane Associate's net sales last year were $525 million. If sales grow at 7.5% per year, how large (in millions) will they be 8 years later? $845.03 $889.51 $936.33 $983.14 $1,032.30
For the most recent year, Robin Company reports operating income of $660,000. Robin's sales margin is 7%, and capital turnover is 2.0.What is Robin's return on investment (ROI)? Question 15 options: 2% 7% 4% 14%
Blur Corp. has an expected net operating profit after taxes, EBIT(1-T), of $7,600 million in the coming year. In addition, the firm is expected to have net capital expenditures of $1,140 million, and net operating working capital (NOWC) is expected to increase by $10 million. How much free cash flow (FCF) Is Blur Corp. expected to generate over the next year? ○ $118,668 million $6,450 million ○ $8,730 million O $6,470 million Blur Corp.'s FCFs are expected to grow at a constant rate of 4.62% per year in the future. The market value of Blur Corp.'s outstanding debt is $31,412 million, and its preferred stocks' value is $17,451 million. Blur Corp. has 150 million shares of common stock outstanding, and its weighted average cost of capital (WACC) equals 13.86%. Term Total firm value Intrinsic value of common equity Intrinsic value per share Value (Millions) Using the preceding information and the FCF you calculated in the previous question, calculate the appropriate values in this table.…
Your company forecasts that next year's sales will be $59.00 million, Cost of Goods Sold (COGS) will be 85% of sales, and the Days Payables Outstanding (DPO) ratio will be 22.19. What is the forecasted accounts payable for next year?
Cordell, Inc., has an operating leverage of 3. Sales are expected to increase by 9% next year. What is the expected change in operating income next year?fill in the blank 1 % Increase or Decrease?
Given the most recent financial statements for FY2023. Sales for FY2024 are expected to grow by 10 percent. The following assumption must be held in the pro forma financial statements. The tax rate (percentage), the interest expense ($ amount), and the dividend payout ratio (percentage) will remain constant. COGS, SGA, Depreciation, all current asset accounts, Net PPE, intangibles, other assets, and accounts payable increase spontaneously with sales. Calculate the internal growth rate if the firm operates at full capacity and no new debt or equity is issued. (Enter percentages as decimals and round to 4 decimals) MSFT ($ in millions, shares in millions) Income Statement Sales COGS Gross Profit Research and Dev. SGA FY2023 211,915 65,863 146,052 27,195 16653 Depreciation 13681 Operating Income, EBIT 88,523 Interest Expense 1968 Pretax income, EBT 86,555 Taxes 16950 Net income 69,605 32,902 36,703 Retained Earnings Dividends Price per share Shares outstanding 330.24 7,430 Balance Sheet…
Blur Corp. has an expected net operating profit after taxes, EBIT(1-T), of $7,600 million in the coming year. In addition, the firm is expected to have net capital expenditures of $1,140 million, and net operating working capital (NOWC) is expected to increase by $10 million. How much free cash flow (FCF) is Blur Corp. expected to generate over the next year? O $118,668 million $6,450 million O $8,730 million O $6,470 million Blur Corp.'s FCFs are expected to grow at a constant rate of 4.62% per year in the future. The market value of Blur Corp.'s outstanding debt is $31,412 million, and its preferred stocks' value is $17,451 million. Blur Corp. has 150 million shares of common stock outstanding, and its weighted average cost of capital (WACC) equals 13.86%. Term Total firm value Intrinsic value of common equity Intrinsic value per share Value (Millions) Using the preceding information and the FCF you calculated in the previous question, calculate the appropriate values in this table.…
14-4. (Financial forecasting—percent of sales) Next year’s sales for Cumberland Mfg.are expected to be $22 million. Current sales are $18 million, based on current assets of$5 million and fixed assets of $5 million. The firm’s net profit margin is 5 percent after taxes.Cumberland estimates that current assets will rise in direct proportion to the increase insales but that its fixed assets will increase by only $150,000. Currently, Cumberland has$2 million in accounts payable (which vary directly with sales), $1 million in long-termdebt (due in 10 years), and common equity (including $4 million in retained earnings) totaling $6.5 million. Cumberland plans to pay $750,000 in common stock dividends next year.a. What are Cumberland’s total financing needs (that is, total assets) for the coming year?b. Given the firm’s projections and dividend payment plans, what are its discretionary financing needs?c. Based on your projections, and assuming that the $150,000 expansion in fixedassets…