Sales Costs Taxable Income Income Taxes Income Statement Sales -The most recent financial statements for a compan Costs €65.000,00 €45.000,00 €20.000,00 C 5.000,00 Net Income €15.000,00 Assets and costs are proportional to sales. Debt and equity are not. A dividend of €10.000 was paid, and the company wishes to maintain a constant payout ratio. Next year's sales are projected to be €84.500,00. a) Create the pro forma statements and reconcile them. Pro-Forma Income Statement Taxable Income Assets Total Taxes (25%) € 80.000,00 €80.000,00 Balance Sheet Debt Equity Total Assets Total €20.000,00 €60.000,00 €80.000,00 Pro-Forma Balance Sheet Debt Equity Total

Sales Costs Taxable Income Income Taxes Income Statement Sales -The most recent financial statements for a compan Costs €65.000,00 €45.000,00 €20.000,00 C 5.000,00 Net Income €15.000,00 Assets and costs are proportional to sales. Debt and equity are not. A dividend of €10.000 was paid, and the company wishes to maintain a constant payout ratio. Next year's sales are projected to be €84.500,00. a) Create the pro forma statements and reconcile them. Pro-Forma Income Statement Taxable Income Assets Total Taxes (25%) € 80.000,00 €80.000,00 Balance Sheet Debt Equity Total Assets Total €20.000,00 €60.000,00 €80.000,00 Pro-Forma Balance Sheet Debt Equity Total

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Review Annual Profit Rate Given the following information compute the annual profit rate: Investment Duration (months) Balance Account 1000 250000 150000 12 24 6 Profit Distributable 30 23500 1500 Application Mudaraba The Unre tricted Investment Accounts (UIA) of an Islamic Bank are based on a Mudaraba agreements with a profit-sharing ratio of 40% (Mudarib) and 60% (Capital Provider). The Islamic bank invested the UIA balance of QR 2.500.000 million in an oil company for one year with the agreement to share the profit with the oil company using the following ratio 55% (Mudarib) and 45% (Capital Provider). At the end of the year the oil company earned QR 125.000 as profit. Find the income distributable to the UIA holders. Find the UIA holders annual profit rate. Suppose the market annual profit rate for the same type of Unrestricted Investment Accounts is 1.75 %. What would be the new profit-sharing ratio between the Islamic Bank and the Unrestricted Investment Accounts holders.
Calculate the external financing needed given the following financial statements. Assume that all costs, all assets, and accounts payable change proportionally with sales. Sales are projected to grow by 25%. Also assume that the company is operating at full capacity. Current Statement of Comprehensive Income Sales $50,000 CoGS 30,000 EBDIT 20,000 Depreciation 10,000 EBIT 10,000 Interest expense 5,000 Taxable income 5,000 Taxes (35%) 1,750 Net Income 3,250 Dividends 975 Addition to RE 2,275 Current Statement of Financial Position Cash $8,000 Accounts receivable 22,000 Inventory 30,000 Total current assets 60,000 Fixed assets 90,000 Total assets $150,000 Accounts payable $15,000 Notes payable 5,000 Total current liabilities 20,000 Long-term debt 40,000 Common stock 40,000 Retained earnings 50,000 Total owners’ equity 90,000 Total Liabilities and OE $150,000 Select one answer A- $33,750 B- $34,656.25 C- $30,906.25 D- $37,500 E- $22,500
Consider the following income statement for Larry & Harry drug stores: Revenue - 90mm Variable costs- 48mm Interest on debt- 6mm Depreciation- 0 mm It’s tax rate is 25% and the book value of its equity is 150mm. What is L&H’s coverage ratio? A) 0.18 B) 5.25 C) 6 D) 7 E) 8 F)15
Use the table for the question(s) below. FCF Forecast ($ million) Year Sales 1 270 12.5% 32.40 Less: Income Tax (37%) (6.48) Less Increase in NWC (12% of Change in Sales) 3,60 Free Cash Flow 22.32 Growth versus Prior Year EBIT (10% of Sales) 0 240 OA. $4.27 OB. $7.47 OC. $12.8 OD. $5.12 2 290 7.4% 34.80 (6.96) 2.40 25.44 ACCE 3 310 6.9% 37.20 (7.44) 2.40 27.36 Banco Industries expect sales to grow at a rapid rate over the next 3 years, but settle to an industry growth rate of 4% in year 4. The spreadsheet above shows a simplified pro forma for Banco Industries. Banco industries has a weighted average cost of capital of 10%, $30 million in cash, $60 million in debt, and 18 million shares outstanding. If Banco Industries can reduce its operating expenses so that EBIT becomes 12% of sales, by how much will its stock price increase? 4 325.5 5.0% 39.06 (7.81) 1.86 29.388
H1.
Provide correct solution
5 Edmonds Industries is forecasting the following income statement: Sales Operating costs (excl. Depr. & Amort.) EBITDA Depreciation EBIT Interest EBT Taxes (40%) Net income $10,000,000 5,500,000 4,500,000 1,200,000 $ 3,300,000 500,000 $ 2,800,000 1,120,000 $ 1,680,000 The CEO would like to see higher sales and a forecasted net income of $2,100,000. Assume that operating costs (excluding depreciation and amortization) are 55% of sales and that depreciation and amortization and interest expenses will increase by 6%. The tax rate, which is 40%, will remain the same. (Note that while the tax rate remains constant, the taxes paid will change.) What level of sales would generate $2,100,000 in net income?
Year Revenue Fixed costs Variable costs 0 1 1000.00 150.00 200.00 Add. investment in NWC 10.00 Add. investment in operating long-term 70.00 assets Depreciation 60.00 Interest expenses 35.00 Newly issued debt 25.00 Principle repayments 15.00 Market value of the firm: Short-term debt Long-term debt Price per share No. of shares Market value 200.00 600.00 18.00 100 1,800.00 2,600.00 Common stock Total Cost of equity (Rs) Tax rate 0.1400 0.40 Growth rate per year from year 1 through 0.12 year 5 Growth rate after year 5 0.05 Based on the above information, what is the stock price per share based on the equity free cash flow model? Select one: O a. 36.46 O b. 40.33 O c. 44.47 O d. 32.53