Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Can I get answers to this please. Thank you very much. 3. Use the following assumptions and 2019 data to generate a forecast. The firm

Can I get answers to this please. Thank you very much.

image text in transcribed
3. Use the following assumptions and 2019 data to generate a forecast. The firm is operating at 80% capacity. Sales are expected to increase by 10%. COGS increase with sales. Other expenses will be 3%% of sales. Interest expense will remain constant. Tax rate and dividend payout ratio remain constant. Total current assets, needed). accounts payable and accruals increase with sales. Determine EFN (external financing Use data for 2019 and the forecast to calculate ROE using the DuPont Identity. Which year had better ROE? Briefly explain why ROE was better during that year. Income Statement for Year Ending December 31, 2019 (Millions of Dollars) 12/31/2019 Calculations Sales 2,850 Forecast COGS 2,490 Other expenses 190 EBIT 270 Interest 60 EBT 210 Taxes 63 Net Income 147 Dividends 60 Addition to Retained 87 Earnings Balance Sheet for Year Ending December 31, 2019 (Millions of Dollars) 12/31/2019 Calculations Cash Forecast 10 Marketable Securities 60 Accounts Receivable 315 Inventories 615 Total Current Assets 1,000 Net Fixed Assets 1,050 Total Assets 2.050 Accounts Payable and 200 Accruals Notes Payable 110 Total Current Liabilities 310 Long-Term Debt 804 Total Debt 1,114 Common Stock 170 Retained Earnings 766 Total Common Equity 936 Total Liabilities and Equity 2.050

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

Microeconomics

Authors: Glenn Hubbard, Anthony O'Brien

7th Edition

0134737504, 978-0134737508

More Books

Students also viewed these Finance questions

Question

Context, i.e. the context of the information presented and received

Answered: 1 week ago