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The most recent financial statements for Crosby, Inc., follow. Sales for 2018 are projected to grow by 30 percent. Interest expense will remain constant; the
The most recent financial statements for Crosby, Inc., follow. Sales for 2018 are projected to grow by 30 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 | $ | 771,000 | ||||
Costs | 627,000 | |||||
Other expenses | 33,000 | |||||
Earnings before interest and taxes | $ | 111,000 | ||||
Interest paid | 17,200 | |||||
Taxable income | $ | 93,800 | ||||
Taxes (23%) | 21,574 | |||||
Net income | $ | 72,226 | ||||
Dividends | $ | 20,640 | ||||
Addition to retained earnings | 51,586 | |||||
CROSBY, INC. Balance Sheet as of December 31, 2017 | |||||||
Assets | Liabilities and Owners Equity | ||||||
Current assets | Current liabilities | ||||||
Cash | $ | 26,040 | Accounts payable | $ | 64,600 | ||
Accounts receivable | 35,540 | Notes payable | 20,000 | ||||
Inventory | 72,140 | Total | $ | 84,600 | |||
Total | $ | 133,720 | Long-term debt | $ | 119,000 | ||
Owners equity | |||||||
Fixed assets | Common stock and paid-in surplus | $ | 118,000 | ||||
Net plant and equipment | $ | 228,000 | Retained earnings | 40,120 | |||
Total | $ | 158,120 | |||||
Total assets | $ | 361,720 | Total liabilities and owners equity | $ | 361,720 | ||
What is the EFN if the firm wishes to keep its debt-equity ratio constant? (Do not round intermediate calculations and round your answer to the nearest whole dollar amount, e.g., 32.) |
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