Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Assume that sales will grow at 5.00%. The following accounts (cash, accounts receivable, inventory, net fixed assets, accounts payable and accruals, as well as operating

Assume that sales will grow at 5.00%. The following accounts (cash, accounts receivable, inventory, net fixed assets, accounts payable and accruals, as well as operating costs) are assumed to change with sales and will maintain their current percentage of sales rates into 2016. The dividend payout ratio will remain the same. Long-term debt and notes payable will remain constant into 2016 as will interest expense, as a result. The firm also does not plan to issue any additional common stock or conduct any share repurchases. The firms tax rate is 40%. Any additional funds needed will be sourced through a line-of-credit (LOC) and surpluses will be paid out through a special dividend.

2015
Sales $1,425.00
Operating Costs: $1,275.00
EBIT $150.00
Interest $35.00
Earnings Before Taxes $115.00
Taxes (40%) $46.00
Net Income $69.00
Dividends $34.50
Addition to Retained Earnings $34.50

BALANCE SHEET AS OF 12/31/2015:

ASSETS 2015
Cash $71.25
Accounts Receivable $142.50
Inventory $285.00
Current Assets $498.75
Net Fixed Assets (Net PPE) $356.25
Total Assets (TA) $855.00

LIABILITIES & SHAREHOLDER EQUITY 2015
Accounts Payable and Accruals $35.63
Notes Payable $40.00
Current Liabilities $75.63
Long Term Debt $310.00
Total Liabilities $385.63
Common Stock $300.00
Retained Earnings $169.38
Owners' Equity $469.38
Total Liabilities and Shareholder Equity $855.00

In the following questions, determine the percentage-of-sale forecast factors:

Accounts Payable & Accruals:
Operating Costs:
Cash:
Accounts Receivable:
Inventory:
Net Fixed Assets (NFA):
Dividend Payout Ratio (as percentage of Net Income):

Fill in your answer for the red blank( WHICH IS FIND OPERATING COSTS) PLEASE help

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Principles Of Auditing

Authors: O. Ray Whittington, Kurt Pany, Walter B. Meigs

12th Edition

0256167796, 978-0256167795

More Books

Students also viewed these Accounting questions