Pro forma income statement austin grocers recently

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17-4PRO FORMA INCOME STATEMENT: Austin Grocers recently reported the following 2008 income statement (in millionsof dollars):Sales $700Operate ring cost includingdepreciation500
EBIT 200Interest 40EBT $160Taxes (40%) 64Net Income $ 96Dividends 32Additional to retained earning $ 64This year the company is forecasting a 25% increase in sales; and it expects that its year-end operating cost,including depreciation, will equal 70% of sales. Austin’s tax rate, interest expense, and dividend payout ratio are allexpected to remain constant.a. What is Austin’s projected 2009 net income?b. What is the expected growth rate in Austin’s dividends?
b.Since dividend payout ratio is same 33.33% ($32 / $96 in the year 2008), current year dividend is $44.49(33.3333% of $133.5).Hence growth in dividend = ($44.49 - $32) / $32 = 39.02%17-5Walter industries has $5 billion in sales and $1.7 billion in fixed assets. Currently, the company's fixed assets areoperating at 90% of capacity.a) What level of sales would Walter Industries have obtained if it had been operating at full capacity?b) What is Walter's Target fixed assets/Sales ratio?c) If Walter's sales increase 12%, how large of an increase in fixed assets will the company need to meet its Targetfixed assets/sales ratio?

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Term
Winter
Professor
james warrent
Tags
Accounting, Balance Sheet, Revenue, Generally Accepted Accounting Principles, CFO

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