Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

(Forecasting net income) in November of each year, the CFO of Barker Electronics begins the finan coming year. Barker is a smatl electronics manufacturing compacy

image text in transcribed
image text in transcribed
image text in transcribed
(Forecasting net income) in November of each year, the CFO of Barker Electronics begins the finan coming year. Barker is a smatl electronics manufacturing compacy localed in Moline, Elinois, which is best known as the home of the John Deere Company. The CFO begins the process with the mosi recent year's income stasement, peojects sales growti for the conving year, and then estimates net income and finaly the additional earrings he can expect to retain and reinvest in the firm. The firm's income satement for 2018 follows: The electronics business has been growing repidy over the past 18 months as the econeny recevers, and the CFO estimates that sales will expand by 22 percent in the next year. In addition, he ostimbtes the folowing relationships between each of the income statement expense ilems and sales. Note that for the coming year both depreciation expense and interest expense are. projecled to remain the same as in 2018. a. Estimele Baners net income for 2019 and its adstion to reained earmings undec the assumpten that the firm lewes lit dividends paid at tre 2018 level. b. Reevaluate Barker's net incoene and adstion to rethined earrings if sales grow at 44 percent over the coming year. Howevec, this wcenario requires the addifon of new plant and equpment in the amount of $120.000, which ncreases arrial depreciation to $53.000 per year, and interest expense rises to $10,000. a. What is the estimate of Barkers net nocome for 2019 ? (Round to the nesest dollar.) Data table e) In Novomber of each year, the CFO of Eariar Bectonics begins the finan Next question tow to detemin a smali electronics manufacturing oompany located in Moine. Einois. Which is best known as the home of tho jo mo statement, projocts sules gowth for the coming year and ten estemates net income and finaly the adifion: tor 2018 totows. ss has been growng rapidy over the past't monts an the economy recovent and the CFO estimates that sale relatianships between each of the income statemert expense tems and sales... Note that for the ceming ye Data table (Click on the foliowing ioon 0 in crder to copy as coriecis into a spreadsheet!)

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

Public School Finance Decoded

Authors: Jay C. Toland

1st Edition

1475827679, 978-1475827675

More Books

Students also viewed these Finance questions