Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The most recent financial statements for Crosby, Inc., follow. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain

The most recent financial statements for Crosby, Inc., follow. 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. Assume the firm is operating at full capacity and the debt-equity ratio is held constant.image text in transcribedimage text in transcribed

2017 Income Statement Sales Costs Other expenses $759,000 615,000 27,000 $ 117,000 Earnings before interest and taxes Interest paid 12,400 Taxable income Taxes (21%) $ 104,600 21,966 Net income $ 82,634 $39,540 Dividends Addition to retained earnings 43,094 CROSBY, INC. Balance Sheet as of December 31, 2017 Assets Liabilities and Owners' Equity Current assets Current liabilities Cash $ 24,840 Accounts payable $ 59,800 Accounts receivable 34,220 Notes payable 16,400 Inventory 71,060 Total $ 76,200 Total $ 130,120 Long-term debt $ 107,000 Fixed assets Owners' equity Common stock and paid-in surplus Retained earnings $102,000 Net plant and equipment $216,000 60,920 Total $162,920 Total assets $ 346,120 Total liabilities and owners' equity $ 346,120 Complete the pro forma income statements below. (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.) Pro Forma Income Statement 15% Sales Growth 20% Sales Growth 45% Sales Growth Sales Costs Other expenses EBIT Interest paid Taxable income Taxes (21%) Net income Dividends Add to RE Calculate the EFN for 15, 20 and 45 percent growth rates. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to the nearest whole dollar amount.) 15% 20% 45% EFN

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

Bond Markets Analysis And Strategies

Authors: Frank J. Fabozzi

6th Edition

0131986430, 9780131986435

More Books

Students also viewed these Finance questions

Question

How does Krumsiek deal with complaints about other team members?

Answered: 1 week ago