Ch_04_Inclass_Exercise_Solutions

Ch_04_Inclass_Exercise_Solutions - With Fixed Assets...

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1 With Fixed Assets varying with Sales, need more capacity Ch 04 Inclass Exercise Income Statement Base Proforma Year Year1 Sales 5,000 x(1+0.1) 5,500 Costs 3,000 x(1+0.1) 3,300 EBT 2,000 2,200 Tax 800 880 Net Income 1,200 1,320 Dividends 600 660 Addition to RE 600 660 Assumptions: ROA 12.63% Sales Growth 10% ROE 29.27% Dividend Payout Ratio 50% DPR 50.00% Tax Rate 40% b 50.00% IGR 6.74% Proforma SGR 17.14% Retained Earnings Rollforward Year1 Retained Earnings - Beginning 2,100 Add: Net Income 1,320 Less: Dividends Paid -660 Retained Earnings - Ending 2,760 Balance Sheet Base Proforma Base Proforma Year Year1 Year Year1 Current Assets Current Liabilities Cash 500 x(1+0.1) 550 A/P 900 x(1+0.1) 990 A/R 2,000 x(1+0.1) 2,200 N/P 2,500 n/a 2,500 Inventory 3,000 x(1+0.1) 3,300 Total 3,400 3,490 Total 5,500 6,050 LT Debt 2,000 n/a 2,000 Net PP&E 4,000 x(1+0.1) 4,400 Owners’ Equity Total Assets 9,500 10,450 CS & APIC 2,000 n/a 2,000 RE 2,100 n/a 2,760 Total 4,100 4,760 Assumptions: Total L & OE 9,500 10,250 Sales Growth 10% Dividend Payout Ratio 50% EFN 200 Tax Rate 40%
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This note was uploaded on 11/29/2011 for the course FINANCE 332 taught by Professor Linney during the Fall '11 term at Guilford Tech.

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Ch_04_Inclass_Exercise_Solutions - With Fixed Assets...

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