Question
S&S Air, INC. 2009 Income Statement Sales $30,499,420 Cost of goods sold $22,224,580 Other expenses $3,867,500 Depreciation $1,366,680 EBIT $3,040,660 Interest $478,240 Taxable income $2,562,420
S&S Air, INC. | ||
2009 Income Statement | ||
Sales |
| $30,499,420 |
Cost of goods sold |
| $22,224,580 |
Other expenses |
| $3,867,500 |
Depreciation |
| $1,366,680 |
EBIT |
| $3,040,660 |
Interest |
| $478,240 |
Taxable income |
| $2,562,420 |
Taxes (40%) |
| $1,024,968 |
Net income |
| $1,537,452 |
Dividends | $560,000 |
|
Add to retained earnings | $977,452 |
|
S&S Air, INC. | ||||
2009 Balance Sheet | ||||
Assets |
| Liabilities and Equity | ||
Current assets |
|
| Current liabilities |
|
Cash | $441,000 |
| Accounts payable | $889,000 |
Accounts receivable | $708,400 |
| Notes payable | $2,030,000 |
Inventory | $1,037,120 |
| Total current liabilities | $2,919,000 |
Total current assets | $2,186,520 |
|
|
|
|
|
| Long term debt | $5,320,000 |
Fixed assets |
|
|
|
|
Net plant and equipment | $16,122,400 |
| Shareholder equity |
|
|
|
| Common stock | $350,000 |
|
|
| Retained earnings | $9,719,920 |
|
|
| Total equity | $10,069,920 |
|
|
|
|
|
Total assets | $18,308,920 |
| Total liabilities and equity | $18,308,920 |
Assume that the company, currently operating at full capacity, cannot simply increase fixed assets by 12%. Instead, the firm must buy a new line of business at a cost of 5 million dollars. Calculate the external financing needed (EFN) and capacity utilization for next year. Use Excel to create pro-forma financial statements and clearly explain your thinking and calculations.
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