![Problem 4-27 EFN and Internal Growth [LO2, 3] The most recent financial statements for Crosby, Inc., follow. Interest expense](http://img.homeworklib.com/questions/d1301140-7a1b-11ea-93a5-315620a309ef.png?x-oss-process=image/resize,w_560)
Homework Answers
Preparing the Pro formo Income Statement:
| Pro Forma Income Statement | |||
| Particular | 20% Sales Growth | 25% Sales Growth | 30% Sales Growth |
| Sales [sales(1+% Increase)] | 906000 | 943750 | 981500 |
| Less: Costs | 733200 | 763750 | 794300 |
| Less: Other costs | 30000 | 31250 | 32500 |
| Earning Before Interest & Taxes | 142800 | 148750 | 154700 |
| Less: Interest paid [remain constant] | 10800 | 10800 | 10800 |
| Taxable Income | 132000 | 137950 | 143900 |
| Less : Tax@22% | 29040 | 30349 | 31658 |
| Net Income | 102960 | 107601 | 112242 |
| Dividends* @37.7269% | 38843.62 | 40594.52 | 42345.43 |
| Additions to Retained Earnings | 64116.38 | 67006.48 | 69896.57 |
*- Dividend Payout Ratio = Dividend/Net Income ;= 31840/84396
= 37.7269%
b). EFN = Total assets*(% change in forecasted Sales) - Spontaneous Liability*(% change in forecasted Sales) - Additions to Retained Earnings
Calculating EFN for 20, 25 & 30 percent sales growth using above formula:-
-- EFN for 20% growth = (340920*20%)-(58200*20%)-64116.38
= 68184 - 11640 - 64116.38
= -$7572.38
-- EFN for 25% growth = (340920*25%)-(58200*25%)-67006.48
= 85230 - 14550 - 67006.48
= $3673.52
-- EFN for 30% growth = (340920*30%)-(58200*30%)-69896.57
= 102276 - 17460 -69896.57
= $14919.43
If you need any clarification regarding this solution, then you can ask in comments
If you like my answer then please Up-vote as it will be motivating.
Add Answer to:
Problem 4-27 EFN and Internal Growth [LO2, 3] The most recent financial statements for Crosby, Inc.,...
The most recent financial statements for Crosby, Inc., follow. Sales for 2018 are projected to grow...
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 $755,000 Costs 611,000 Other expenses 25,000 Earnings before interest $ 119,000 and taxes Interest pald 10,800 Taxable income Taxes (22%) $ 108,200 23,804 Net...
The most recent financial statements for Crosby, Inc., follow. Interest expense will remain constant, the tax...
The most recent financial statements for Crosby, Inc., follow. Interest expense will remain constant, the tax rate and the dividend payout rate will also rem 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. CROSBY, INC. 2017 Income Statement Sales Costs Other expenses $755,000 611,000 25,000 Earnings before interest and taxes Interest paid $ 119,000 10,800 Taxable income Taxes (22%)...
The most recent financial statements for Crosby, Inc., follow. Interest expense will remain constant, the tax...
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. CROSBY, INC. 2017 Income Statement Sales Costs Other expenses $755,000 611,000 25.000 Earnings before interest and taxes Interest paid $ 119,000 10,800 Taxable income...
Saved Help Save & Problem 4-24 Calculating EFN [LO2 The most recent financial statements for Crosby,...
Saved Help Save & Problem 4-24 Calculating EFN [LO2 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 Costs Other expenses $748 000 583.000 19.000 Earnings before interest and taxes Interest paid $...
The most recent financial statements for Crosby, Inc., follow. Sales for 2018 are projected to grow...
The most recent financial statements for Crosby, Inc., follow. Sales for 2018 are projected to grow by 20 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 Costs Other expenses $750,000 585,000 21,000 Earnings before interest and taxes Interest paid $ 144,000 17,000 Taxable income Taxes (22%) $ 127,000 27,940 Net...
The most recent financial statements for Crosby, Inc., follow. Sales for 2018 are projected to grow...
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 Costs Other expenses $748.000 583,000 19,000 Earnings before interest and taxes Interest paid $ 146,000 15,000 Taxable income Taxes (25%) $ 131,000 32.750 Net...
The most recent financial statements for Crosby, Inc., follow. Interest expense will remain constant the tax...
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. CROSBY, INC. 2017 Income Statement Sales $761,000 Costs 617,000 Other expenses 28,000 Earnings before interest and taxes Interest paid $ 116,000 13,200 Taxable income Taxes (23%) $102,800 23,644 Net income $ 79.156 Dividends Addition to retained earnings $27,640 51,516 CROSBY,...
The most recent financial statements for Crosby, Inc., follow. Interest expense will remain constant; the tax...
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.
CROSBY, INC. 2017 Income Statement Sales Costs Other expenses $ 767,000 623,000 31,000 Earnings before interest and taxes Interest paid $ 113,000 15,600 Taxable income Taxes (24%) $ 97,400 23,376 Net income $ 74,024 Dividends Addition to retained earnings $23,440...
Problem 4-31 EFN and Sustainable Growth (LO 2, 4) The most recent financial statements for Hopington...
Problem 4-31 EFN and Sustainable Growth (LO 2, 4) The most recent financial statements for Hopington Tours Inc. follow. Sales for 2018 are projected to grow by 30 and 35% in addition to 20%. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, and accounts payable increase spontaneously with sales. The firm wishes to keep its debt-equity ratio constant. (Do not round intermediate calculations. Round the final...
The most recent financial statements for Crosby, Inc., follow. Interest expense will remain constant; the tax...
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. CROSBY, INC. 2017 Income Statement $763,000 619,000 29,000 Sales Costs Other expenses Earnings before interest and taxes $115,000 Interest paid 14,000 $101,000 25,250 Taxable...
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 $755,000 Costs 611,000 Other expenses 25,000 Earnings before interest $ 119,000 and taxes Interest pald 10,800 Taxable income Taxes (22%) $ 108,200 23,804 Net...
The most recent financial statements for Crosby, Inc., follow. Interest expense will remain constant, the tax rate and the dividend payout rate will also rem 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. CROSBY, INC. 2017 Income Statement Sales Costs Other expenses $755,000 611,000 25,000 Earnings before interest and taxes Interest paid $ 119,000 10,800 Taxable income Taxes (22%)...
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. CROSBY, INC. 2017 Income Statement Sales Costs Other expenses $755,000 611,000 25.000 Earnings before interest and taxes Interest paid $ 119,000 10,800 Taxable income...
Saved Help Save & Problem 4-24 Calculating EFN [LO2 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 Costs Other expenses $748 000 583.000 19.000 Earnings before interest and taxes Interest paid $...
The most recent financial statements for Crosby, Inc., follow. Sales for 2018 are projected to grow by 20 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 Costs Other expenses $750,000 585,000 21,000 Earnings before interest and taxes Interest paid $ 144,000 17,000 Taxable income Taxes (22%) $ 127,000 27,940 Net...
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 Costs Other expenses $748.000 583,000 19,000 Earnings before interest and taxes Interest paid $ 146,000 15,000 Taxable income Taxes (25%) $ 131,000 32.750 Net...
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. CROSBY, INC. 2017 Income Statement Sales $761,000 Costs 617,000 Other expenses 28,000 Earnings before interest and taxes Interest paid $ 116,000 13,200 Taxable income Taxes (23%) $102,800 23,644 Net income $ 79.156 Dividends Addition to retained earnings $27,640 51,516 CROSBY,...
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.
CROSBY, INC. 2017 Income Statement Sales Costs Other expenses $ 767,000 623,000 31,000 Earnings before interest and taxes Interest paid $ 113,000 15,600 Taxable income Taxes (24%) $ 97,400 23,376 Net income $ 74,024 Dividends Addition to retained earnings $23,440...
Problem 4-31 EFN and Sustainable Growth (LO 2, 4) The most recent financial statements for Hopington Tours Inc. follow. Sales for 2018 are projected to grow by 30 and 35% in addition to 20%. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, and accounts payable increase spontaneously with sales. The firm wishes to keep its debt-equity ratio constant. (Do not round intermediate calculations. Round the final...
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. CROSBY, INC. 2017 Income Statement $763,000 619,000 29,000 Sales Costs Other expenses Earnings before interest and taxes $115,000 Interest paid 14,000 $101,000 25,250 Taxable...
Most questions answered within 3 hours.
-
Where is the error in this code sequence?
String s1 = "Hello";
String s2 = "ello";...
asked 10 months ago -
Financial data for Joel de Paris, Inc., for last year
follow:
Joel de Paris, Inc.
Balance...
asked 10 months ago -
Consider this reaction:
Al2(SO4)3 (aq)+ BaCl3
(aq) Al2Cl6 (aq)- +
3BaSO4(s) . What is the...
asked 10 months ago -
Suppose that Savneet is considering increasing her
recent random sample from 20 car rentals to 40...
asked 10 months ago -
Trucks arrive at an unloading terminal at an average rate of 120
per hour.
Trucks arrive...
asked 10 months ago -
Why are methanol and ethanol completely soluble in water while
octanol is not very little soluble....
asked 10 months ago -
A facilities manager at a university reads in a research report
that the mean amount of...
asked 10 months ago -
When the CuSO4 is rehydrated by adding water to the anhydrous
compound, is this an endothermic...
asked 10 months ago -
A ray of sunlight is passing from diamond into crown glass; the
angle of incidence is...
asked 10 months ago -
A block of mass 0.249 kg is placed on top of a light, vertical
spring of...
asked 10 months ago -
how do the kidneys compensate in the presences of acidosis
a) trigger hyperventilate
b) reserve acid...
asked 10 months ago -
Question 501 pts
The rental rate of capital to the firm increases. Which of the
following...
asked 10 months ago