2017 Income Statement Sales $611,582,000 Cost of Goods Sold 431,006,000 Selling, general & admin expenses 73,085,700 Depreciation 19,958,400 EBIT $87,531,900 Interest expense 11,000,900 EBT $76,531,000 Taxes 30,612,400 Net Income $45,918,600 Dividends $17,374,500 Retained Earnings $28,544,100 2017

Balance Sheet Current Assets Current liabilities Cash and equivalents $11,119,700 Accounts payable $44,461,550 Accounts receivable 18,681,500 Accrued expenses 6,123,200 Inventory 20,149,650 Total current liabilities $50,584,750 Other 1,172,200 Total current assets $51,123,050 Fixed assets Long-term debt $169,260,000 Property, plant and equipment $457,509,600 Total long-term liabilities $169,260,000 Less accumulated depreciation (113,845,900) Net property, plant and equipment $343,663,700 Intangible assets and others 6,772,000 Stockholders' equity Total fixed assets $350,435,700 Preferred stock $1,970,000 Common stock 37,583,700 Capital surplus 28,116,300 Accumulated retained earnings 161,564,000 Less treasury stock (47,520,000) Total equity $181,714,000 Total assets $401,558,750 Total liabilities and shareholders' equity $401,558,750

6. Assume that East Coast Yachts is currently producing at 100% of capacity and sales are expected to grow at 20%. As a result, to expand production, the company must set up an entirely new line at a cost of $95,000,000. Prepare the proforma income statement and balance sheet. What is the new EFN with these assumptions? What does this imply about capacity utilization for East Coast Yachts next year?
Sustainable Growth Rate:	20%
At the sustainable growth rate, the pro forma statements next year will be:
Income statement			East Cost Yachts
Sales			2017 Balance Sheet
COGS			Current Assets			Current liabilities
Other expenses			Cash and equivalents			Accounts payable
Depreciation			Accounts receivable			Accrued expenses
EBIT			Inventory			Total current liabilities
Interest			Other
Taxable income			Total current assets
Taxes (40%)						Long-term debt
Net income			Fixed assets			Total long-term liabilities
Dividends
Add to RE						Stockholders' equity
						Preferred stock
						Common stock
						Capital surplus
						Accumulated retained earnings
						Less treasury stock
						Total equity
			Total assets			Total liabilities and shareholders' equity
EFN =
Conclusion and Recommendation: