Question 4 ### Pro Forma Income Statement**Objective**: Given the income statement for California Cement Company for 2013 and an expected sales growth rate of 7.38% for 2014, prepare a pro forma income statement for 2014.---#### Step 1: Calculate Sales Forecast for 2014- **Net income for 2013**: $3,143,016- **Sales growth rate 2014**: 7.38%- **Sales revenue 2013**: $22,817,000**Formula**: \[ \text{Sales Forecast for 2014} = \text{Sales Revenue 2013} \times (1 + \text{Sales Growth Rate}) \]**Calculate**:\[ \text{Sales Forecast for 2014} = \$22,817,000 \times 1.0738 = \$24,503,336 \]---#### Pro Forma Income Statement for 2014 (Round to nearest dollar)**California Cement Company**| **Description** | **2014 (in $)** ||---------------------------------------------|-----------------|| Sales revenue | 24,503,336 || Cost of goods sold | 12,500,480 || Selling, general, and administrative expenses| 4,297,096 || Depreciation expenses | 1,487,633 || EBIT (Earnings Before Interest and Taxes) | 6,218,127 || Interest expense | 186,221 || Taxable income | 6,031,906 || Taxes | 2,888,890 || **Net income** | **3,143,016** |---### Explanation of Components:1. **Sales Revenue**: Calculated by applying the growth rate to the previous year’s sales.2. **Cost of Goods Sold (COGS)**: Traditionally a percentage of sales, increased similarly with the sales forecast.3. **Selling, General, and Administrative Expenses**: Typically a constant ratio of sales, adjusted based on the sales forecast.4. **Depreciation Expenses**: Assume a moderate increase reflecting capital investments.5. **EBIT**: Calculated as sales minus expenses prior to interest and taxes.6. **Interest Expense**: Reflects any anticipated change in company debt.7. **Taxes** **Pro Forma Income Statement for California Cement Company****Income Statement for 2013:**- **Sales Revenue**: $22,817,000- **Cost of Goods Sold**: -$11,660,000- **Selling, General, and Administrative Expenses**: -$4,002,000- **Depreciation Expenses**: -$1,386,000- **EBIT (Earnings Before Interest and Taxes)**: $5,769,000- **Interest Expense**: -$174,000- **Taxable Income**: $5,595,000- **Taxes**: -$2,451,984- **Net Income**: $3,143,016The task is to prepare a pro forma income statement for 2014 with a projected sales growth rate of 7.38%.**Questions:**1. **What is the sales forecast for 2014?** - Answer: (Round to the nearest dollar.)2. **The pro forma income statement for 2014 is:** - (Round to the nearest dollar.)**Data Table Explanation:**The table provided is a basic income statement for 2013 detailing the various financial metrics such as revenue, costs, and earnings. The goal is to anticipate these numbers for 2014 based on a specified growth rate, helping in financial planning and analysis.

A component of the financial statement of a company that provides information regarding the profit…

Pro forma income statement. Given the income statement in the popup window, E, for California Cement Company for 2013 and an expected sales growth rate of 7.38% for 2014, prepare a pro forma income statement for 2014. Net income 3,143,016 Data Table What is the sales forecast for 2014? $ (Round to the nearest dollar.) California Cement Company The pro forma income statement for 2014 is: (Round to the nearest dollar.) Income Statement for 2013 California Cement Company Sales revenue 22,817,00 Pro Forma Income Statement for 2014 Cost of goods sold -11,660,00 Sales revenue 100.00 Selling, general, and administrative expenses -4,002,00 Cost of goods sold 2$ 51.102 Depreciation expenses -1,386,00 EBIT Selling, general, and administrative expenses Depreciation expenses 17,540 5,769,00 6.074 Interest expense -174,00 EBIT 2$ 25.284 9 Taxable income 5,595,00 Interest expense 0.763 Taxes $4 -2,451,98 Taxable income 2$ 24.521 Net income 3,143,01 Taxes 2$ 10.746 Net income 13.775 Print Done Enter any number in the edit fields and then continue to the next question.

Pro forma income statement. Given the income statement in the popup window, E, for California Cement Company for 2013 and an expected sales growth rate of 7.38% for 2014, prepare a pro forma income statement for 2014. Net income 3,143,016 Data Table What is the sales forecast for 2014? $ (Round to the nearest dollar.) California Cement Company The pro forma income statement for 2014 is: (Round to the nearest dollar.) Income Statement for 2013 California Cement Company Sales revenue 22,817,00 Pro Forma Income Statement for 2014 Cost of goods sold -11,660,00 Sales revenue 100.00 Selling, general, and administrative expenses -4,002,00 Cost of goods sold 2$ 51.102 Depreciation expenses -1,386,00 EBIT Selling, general, and administrative expenses Depreciation expenses 17,540 5,769,00 6.074 Interest expense -174,00 EBIT 2$ 25.284 9 Taxable income 5,595,00 Interest expense 0.763 Taxes $4 -2,451,98 Taxable income 2$ 24.521 Net income 3,143,01 Taxes 2$ 10.746 Net income 13.775 Print Done Enter any number in the edit fields and then continue to the next question.

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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