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Chapter17 - Allied Food Products Actual 2005 and projected...

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1 Allied Food Products: Actual 2005 and projected 2006 Income Statements ($ Millions) Actual Forecast 2006 Forecast 2005 Basis 1st Pass Feedback 4th Pass Modified (1) (2) (3) (4) (5) (6) 1. Sales $3,000 x 1.10 a $3,300 $3,300 $3,300 2. Costs except deprec 2,616.2 x 1.10 2,877.8 2,877.8 2,854.5 3. Depreciation 100 x 1.10 110 110 105 4. Total operating costs 2,716.2 $2,987.8 2,987.8 2,959.5 5. EBIT $ 283.8 $ 312.2 $ 312.2 $ 340.5 6. Less interest 88 88 b +6.3 94.3 86.2 7. Earnings before taxes $ 195.8 $ 224.2 $ 217.9 $ 254.3 8. Taxes (40%) 78.3 89.7 -2.5 87.2 101.7 9.NI available to $ 117.5 $ 134.5 $ 130.7 $ 152.6 common stockholders 10.Dividends to com. stk. $ 57.5 $ 63.3 c $ 63.3 $ 63.3 11.Addition to retained 60 $ 71.3 -3.8 $ 67.5 $ 89.3 earnings
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2 Allied Food Products: Actual 2005 and projected 2006 Income Statements ($ Millions) a x 1.10 indicates “times 1 + g”; used for items which grow proportionally with sales. Here g = 0.10. b 2005 amount carried over for first-pass forecast. Indicated in Column 2 by an arrow. c Projected figure. See text for explanation.
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3 Allied Food Products: Actual 2005 and projected 2006 Balance Sheets 2006 Forecast Actual‘05 1+ Sales g 1st Pass AFN a 4th Pass (1) (2) (3) (4) (5) Cash $ 10 x 1.10 b $ 11 $ 11 Accounts receivable 375 x 1.10 412.5 412.5 Inventories 615 x 1.10 676.5 676.5 Total current assets $1,000 $1,100 $1,100 Net plant & equipment 1,000 x 1.10 1,100 1,100 Total assets $2,000 $2,200 $2,200 Accounts payable $ 60 x 1.10 $ 66 $ 66 Notes payable 110 110 c +7.9 117.9 Accruals 140 x 1.10 154 154 Total current liabilities $ 310 $ 330 $ 337.9 Long-term bonds 750 750 +51.7 801.7 Total debt $1,060 $1,080 $1,139.6 Common stock 130 130 c +52.9 182.9 Retained earnings 810 +71.3 d 881.3 877.5 Total common equity $ 940 $1,011.3 $1,060.4
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