Question
Consider the following income statement for the Heir Jordan Corporation: HEIR JORDAN CORPORATION Income Statement Sales $ 42,900 Costs 33,900 Taxable income $ 9,000 Taxes
Consider the following income statement for the Heir Jordan Corporation: |
| HEIR JORDAN CORPORATION Income Statement | ||||||
| Sales | $ | 42,900 | ||||
| Costs | 33,900 | |||||
| Taxable income | $ | 9,000 | ||||
| Taxes (35%) | 3,150 | |||||
| Net income | $ | 5,850 | ||||
| | | |||||
| Dividends | $ | 2,400 | ||||
| Addition to retained earnings | 3,450 | |||||
The projected sales growth rate is 18 percent. |
Prepare a pro forma income statement assuming costs vary with sales and the dividend payout ratio is constant. |
| HEIR JORDAN CORPORATION Pro Forma Income Statement | |
| Sales | $ |
| Costs | |
| Taxable income | $ |
| Taxes | |
| Net income | $ |
| | |
What is the projected addition to retained earnings? |
| Retained earnings | $ |
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Intermediate Financial Theory
Authors: Jean-Pierre Danthine, John B. Donaldson
2nd Edition
0123693802, 978-0123693808
