Please answer Question 2. ive posted the other two separately.
After Chris completed the ratio analysis for S&S Air (sce periods when Mark and Todd were unable to draw salaries To Chapter 3), Mark and Todd approached him about planning this end, they would like Chris to prepare a financial plan for for next year's sales. The company had historically used litle the next year so the cormpany can beglo to address any outside planning for investment needs. As a result, the company ex investment requirements. The income statemeet and balance perienced some challenging times because of cash flow prob sheet are shown here ems. The lack of planning resulted in missed sales, as well as S&S AIR, INC 2018 income Statement $46,298,115 34,536,913 Cost of goods sold Other experses Depreciation 2,074,853 3,815,484 725,098 $ 3,090,386 772.597 2,317,789 Taxable income Taxes (21%) Net income $ 705,000 Dividends Add to retained earnings 1,612.789 SES AIR, INC 2012 .lance sheet Llabifities and Equity Current assets Current hiabilties 1,068,356 Cash Accounts roceivable 524,963 843.094 1235,161 Accounts payable Notes payable Total current Siabilities 3507 909 6,300,000 Totel current assets 2,603,218 Long-term debt Fixed assets Net plant and equipment $20381.945 Shareholder equity $ 460,000 12,717.254 $13.177 254 Common stock Retalned earnings 22.985,163 Totel equity Total iities and equity 522,985.163 Totsi assets fixed assets must be increased in specific amounts because it is impossible, as a practical matler, to buy pact of a pew plant or machine. In this case, a compeny has a "saircase or "lumpy fixed cost structure. Assame S&S Air is cus rently producing at 100 percent capacity. As a resalt, to increase production, the company mast set up an entirely new line at a cost of $5,000,000. Calculate the new ERN with this assumption. What does this imply about capacity utilization for the company next year? QUESTIONS L. Calculate the internal growth rate and sustainable growth rate for S&S Air. What do these pumbers mean? 2. S&S Air is planning for a growth rate of 12 percent next year. Calculate the EPN for the company assuming the company is operating at full capacity. Can the company's sales increase at this growth rate? Most assets ean be increased as a percentage of sales. For instance, cash can be increased by any amocnt. However 3. After Chris completed the ratio analysis for S&S Air (sce periods when Mark and Todd were unable to draw salaries To Chapter 3), Mark and Todd approached him about planning this end, they would like Chris to prepare a finmancial plan for for next year's sales. The company had historically used litle the next year so the cormspany can begis to address any outside planning for investmeut needs. As a result, the company ex investment requirements. The income statement and balance perienced some challenging times because of cash flow prob sheet are shown here lems. The lack of planning resulted in missed sales, as well as S&S AIR, INC 2018 income Statement $46.298,115 4,536,913 5,870,865 2,074.853 3,815,484 725.098 $ 3,090,386 772.597 2.317,789 Salas Cost of goods sold Other experses EBIT nterest Taxable income Taxes (21%) Net income Dividends S 705,000 Add to rotained earnings 1,612,789 SES AIR, INC 2012 Balance Sheet Assets Llabilities and Equity Current assets Current abilties 524,963 843.094 1235,161 $ 2,603,218 5 1,068.356 2.439.553 3507.909 6,300,000 Cash Accounts recelvable Accounts payabie Notes payable Total current liabilities Long-term debt Total current essets Fxed assets Net plant and equipment $20381945 Shareholder equity Common stock Retalned earnings Totel equity S 460,000 12717 254 13.177 25A Total assets $22,985,163 Total iablities and equity $22.985.163 fixed assets must be increased in specific amounts because it is impossible, as a practical maner, to buy pact of a new plant or machine. In this case, a conpeny has a "staicase" or "lumpy fixed cost stracture. Assame S&s Air is cus- rently producing at 100 pervent capacity. As a resalt, to increase production, the company mast set up an entirely new line at a cost of $5,000,000. Calculate the new EPN with this assumption. What does this imply about capacigy utilization for the company next year? QUESTIONS 1. Caiculate the internal growth rate and sustainable growth rate for S&S Air. What do these nurnbers mean? S&S Air is planning for a growth rate of 12 percest 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? Most assets ean be increased as a percentage of sales. For instance, cash can be increased by any amount. However 2. 3
