Grace Bells Company is evaluating plans for the coming year Review the following data for the current year and plans 1 and 2 Dollar amounts are given in thousands of dollars BALANCE SHEETS Current Plan 1 Plan 2 Assets Total current assets 500 300 700 Net fixed assets 500 700 700 Total assets 1000 1000 1400 Liabilities and equity Acct pay accrued liab 100 125 140 Note payable 100 190 100 Total current liabilities 200 315 280 Long term debt 100 190 395 Common stock 500 500 500 Retained earnings 200 245 225 Total liabilities and equity 1000 1250 1400 INCOME STATEMENTS Current Plan 1 Plan 2 Sales 2000 2500 2800 EBIT 100 125 140 Interest 16 16 79 36 EBT 84 109 60 64 Net Income 50 40 65 40 36 384 Dividends (30 ) 15 12 19 62 10 92 Addition to Rd Earnings 35 28 45 78 25 47 Free cash flow $60 ($150) ($286) Ratios Current Plan 1 Plan 2 Industry Profit margin 0 025 0 026 0 013 0 040 Return on Equity 0 072 0 088 0 050 0 156 Debt Assets 0 200 0 380 0 354 0 360 Times interest earned 6 25 7 81 1 764 9 400 Do you recommend either plan 1 or plan 2 for Grace Bell Company and why Support you answer citing the projected outcomes from the case and the concepts that you have studied in this course Address the impact of growth on future performance Is the maximum growth possible always the best Why Support you answer citing the projected outcomes from the case and the concepts that you have studied in this course

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Posted on Jul 26, 2024

Grace & Bells Company is evaluating plans for the coming year.
Review the following data for the current year and plans 1 and 2. Dollar amounts are given in thousands of dollars.

BALANCE SHEETS	Current	Plan 1	Plan 2
Assets
Total current assets	500	300	700
Net fixed assets	500	700	700
Total assets	1000	1000	1400

Liabilities and equity
Acct pay & accrued liab.	100	125	140
Note payable	100	190	100
Total current liabilities	200	315	280
Long-term debt	100	190	395
Common stock	500	500	500
Retained earnings	200	245	225
Total liabilities and equity	1000	1250	1400

INCOME STATEMENTS	Current	Plan 1	Plan 2
Sales	2000	2500	2800
EBIT	100	125	140
Interest	16	16	79.36
EBT	84	109	60.64
Net Income	50.40	65.40	36.384

Dividends (30%)	15.12	19.62	10.92
Addition to Rd Earnings	35.28	45.78	25.47
Free cash flow	$60	($150)	($286)

Ratios	Current	Plan 1	Plan 2	Industry
Profit margin	0.025	0.026	0.013	0.040
Return on Equity	0.072	0.088	0.050	0.156
Debt/Assets	0.200	0.380	0.354	0.360
Times interest earned	6.25	7.81	1.764	9.400
				Do you recommend either plan 1 or plan 2 for Grace & Bell Company and why? Support you answer citing the projected outcomes from the case and the concepts that you have studied in this course. Address the impact of growth on future performance. Is the maximum growth possible always the best? Why? Support you answer citing the projected outcomes from the case and the concepts that you have studied in this course.