Vv-6 - #1 Revenues COGS GrossProfit OperatingExpense BadDebtExpense EBIT InterestExpense EBT IncomeTaxExpense NetIncome#2 RetainedEarnings

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
#1 Year 1 Year 2 Year 3 % of Sales Explanation Revenues $430,000 $1,763,000 $6,787,550 This is old sales times (1+growth rate) COGS $270,000 $1,018,850 $3,922,573 57.79% This is percent of sales with 5% subtracted off. Gross Profit $160,000 $744,150 $2,864,978 Operating Expense $100,000 $410,000 $1,578,500 23.26% This is straight-up percent of sales. Bad Debt Expense $21,500 $35,260 $135,751 2.00% This is the goal set by management EBIT $38,500 $298,890 $1,150,727 Interest Expense $5,000 $5,000 $5,000 Holding interest-bearing debt constant EBT $33,500 $293,890 $1,145,727 Income Tax Expense $11,390 $99,923 $389,547 34%  of EBT This is tax rate given Net Income $22,110 $193,967 $756,179 Don't use EBT here to avoid circular reference #2 Year 2 Year 3 Using Formula Retained Earnings $72,520.80 $279,205.08 Using equation given in case notes with year 1 net profit margin Accounting for Dividends Retained Earnings $155,173.92 $604,943.59
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 04/07/2011 for the course BUS M 301 taught by Professor Jimbrau during the Winter '11 term at BYU.

Ask a homework question - tutors are online