Question
East Coast Yachts 2020 Income Statement Sales $550,424,000 Costs of goods sold 397,185,000 Selling, general, and administrative 65,778,000 Depreciation 17,963,000 EBIT $69,498,000 Interest expense 9,900,000
East Coast Yachts
2020 Income Statement
Sales
$550,424,000
Costs of goods sold
397,185,000
Selling, general, and administrative
65,778,000
Depreciation
17,963,000
EBIT
$69,498,000
Interest expense
9,900,000
EBT
$59,598,000
Taxes (25%)
14,899,500
Net income
$44,698,500
Dividends
$19,374,500
Retained earnings
25,324,000
East Coast Yachts
2020 Income Statement
Sales
$550,424,000
Costs of goods sold
397,185,000
Selling, general, and administrative
65,778,000
Depreciation
17,963,000
EBIT
$69,498,000
Interest expense
9,900,000
EBT
$59,598,000
Taxes (25%)
14,899,500
Net income
$44,698,500
Dividends
$19,374,500
Retained earnings
25,324,000
1.(Excel) Calculate the sustainable growth rate for East Coast Yachts.
a.Calculate external funds needed
b.Prepare pro forma income statement and balance sheet using this sustainable growth rate
c.Do you obtain the same numbers of EFN from part a and part b? What source of financing should East Coast Yachts use?
d.Recalculate the ratios in the previous question. What do you observe?
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