Question
You are preparing pro forma financial statements for 2020 using the percent-of-sales method. Sales were $200,000 in 2019 and are projected to be $225,000 in
You are preparing pro forma financial statements for 2020 using the percent-of-sales method. Sales were $200,000 in 2019 and are projected to be $225,000 in 2020. Net income was $15,000 in 2019 and is projected to be $20,000 in 2020. Equity was $50,000 at year-end 2018 and $60,000 at year-end 2019. Assuming that this company never issues new equity, never repurchases equity, and never changes its dividend payout ratio, what would be projected for equity at year-end 2020?
a. $75,000
b. insufficient information to project equity in 2020
c. $65,000
d. $70,000
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