Sales $700 Operating costs including depreciation 500 EBIT $200 Interest 40 EBT $160 Taxes (40%) 64 Net income $ 96 Dividends $ 32 Addition to retained earnings $ 64 For the coming year, the company is forecasting a 25% increase in sales, and it expects th operating costs, including depreciation, will equal 70% of sales. Austin's tax rate, interest dividend payout ratio are all expected to remain constant.
Sales $700 Operating costs including depreciation 500 EBIT $200 Interest 40 EBT $160 Taxes (40%) 64 Net income $ 96 Dividends $ 32 Addition to retained earnings $ 64 For the coming year, the company is forecasting a 25% increase in sales, and it expects th operating costs, including depreciation, will equal 70% of sales. Austin's tax rate, interest dividend payout ratio are all expected to remain constant.
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
Related questions
Question
please answer the following question
Transcribed Image Text:6. Austin Grocers recently reported the following 2019 income statement (in millions of dollars):
Sales
$700
Operating costs including depreciation
500
EBIT
$200
Interest
40
EBT
$160
Taxes (40%)
64
Net income
$ 96
$ 32
$ 64
Dividends
Addition to retained earnings
For the coming year, the company is forecasting a 25% increase in sales, and it expects that its year-end
operating costs, including depreciation, will equal 70% of sales. Austin's tax rate, interest expense, and
dividend payout ratio are all expected to remain constant.
1. What is Austin's projected 2020 net income?
2. What is the expected growth rate in Austin's dividends?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 4 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education