Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

I need the answer to #2. Thank you! SES AIR, INC. 2018 income Statement $46,298,115 Sales Cost of goods sold 34,536,913 Other expenses 5,870,865 2,074,853

image text in transcribed

I need the answer to #2. Thank you!

SES AIR, INC. 2018 income Statement $46,298,115 Sales Cost of goods sold 34,536,913 Other expenses 5,870,865 2,074,853 Depreciation $3,815,484 EBIT Interest 725,098 3,090,386 Taxable income 772,597 Taxes (21%) $ 2,317,789 Net income $ 705,000 Dividends 1,612,789 Add to retained earnings SES AIR, INC. 2018 Balance Sheet Liabilities and Equity Assets Current liabilities Current assets 1,068,356 Cash $ 524,963 Accounts payable Notes payable 2,439,553 843,094 Accounts recelvable $ 3,507,909 Inventory Total current liabilities 1,235,161 2,603,218 $6,300,000 Long-term debt Total current assets Fixed assets $20,381,945 Sharehoider equity Net plant and equipment Common stock 460,000 Retained earnings Total equlty 12,717,254 $13,177,254 $22,985,163 $22,985,163 Total liabilitles and equity Total assets QUESTIONS fixed assets must be increased in specific amounts because it is impossible, as a practical matter, to buy part of a new plant or machine. In this case, a company has a "staircase" or "lumpy" fixed cost structure. Assume S&S Air is cur rently producing at 100 percent capacity. As a result, to increase production, the company must set up an entirely new line at a cost of $5,000,000. Calculate the new EFN with this assumption. What does this imply about capacity utilization for the company next year? 1. Calculate the internal growth rate and sustainable growth rate for S&S Air. What do these numbers mean? 2. S&S Air is planning for a growth rate of 12 percent next year. Calculate the EFN for the company assuming the company is operating at full capacity. Can the company's sales increase at this growth rate? 3. Most assets can be increased as a percentage of sales. For instance, cash can be increased by any amount. However

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

Personal Finance A Practical Approach

Authors: Jane King, Mary Carey

1st Edition

0199668833, 9780199668830

More Books

Students also viewed these Finance questions