Question
Please help! The most recent financial statements for Crosby, Inc., follow. Sales for 2018 are projected to grow by 25 percent. Interest expense will remain
Please help!
The most recent financial statements for Crosby, Inc., follow. Sales for 2018 are projected to grow by 25 percent. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales.
CROSBY, INC. 2017 Income Statement Sales $ 764,000 Costs 620,000 Other expenses 29,500 Earnings before interest and taxes $ 114,500 Interest paid 14,400 Taxable income $ 100,100 Taxes (21%) 21,021 Net income $ 79,079 Dividends $ 25,540 Addition to retained earnings 53,539
What is the EFN if the firm wishes to keep its debt-equity ratio constant?
Balance Sheet as of December 31, 2017 Assets Liabilities and Owners' Equity Current assets Current liabilities Cash $ 25,340 Accounts payable $ 61,800 Accounts receivable 34,770Notes payable 17,900 Inventory 71,510 Total $ 79,700 Total $ 131,620 Long-term debt $ 112,000 Owners' equity Common stock and paid-in surplus Retained earnings Fixed assets Net plant and equipment 111.000 $ 221,000 49.920 Total $ 160,920 Total liabilities and owners $352,620 equity Total assets $352,620Step by Step Solution
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