Question

INCOME STATEMENT

Sales:  $700.00

less Cost of Goods Sold: (blank)

less Other Expenses: $100.00

EBITDA: $300.00

less Depreciation and Amortization this year: $30.00

EBIT: $270.00

less Interest Expense: (blank)

EBT: $245.50

less Taxes: (blank)

Net Income before preferred dividends: ($171.85)

less Preferred Dividends: $10.00

NI: $161.85

less Common Dividends: $100.00

Addition to Retained Earnings: (blank)

Tax Rate: 30.00%

Interest Rate on Notes Payable: 7.00%

Interest Rate on Long Term Bonds: 7.00%

Market Price of Stock: $15.00

Shares Outstanding: 200

Common Dividends Per Share: (blank)

1. Consider the income statement above:

A. What is the value for cost of goods sold?

B. What is the value for interest expense?

C. What is the value for taxes?

D. What is the value for Addition to Retained Earnings?

E. What is the value for common dividends per share?

Thank you in advance!!

Answer 1

Completed Income Statement is as follows:

Sales	$700
Less: Cost of goods sold	$300
Less: Other Expenses	$100
EBITDA	$300
Less: Depreciation and Amortization	$30
EBIT	$270
Less: Interest	$24.5
EBT	$245.50
Less: Taxes	$73.65
Net Income before Preferred Dividends	$171.85
Less: Preferred Dividends	$10
NI	$161.85
Less: Common Dividends	$100
Addition to Retained Earnings	$61.85
Common Dividend per share	$0.5

Notes:

COGS = Sales- Other Expenses-EBITDA

Interest = EBIT – EBT

Taxes = 30%*EBT

Addition to Retained Earnings = NI-Common Dividends

Common Dividend per Share = Common Dividend/Shares Outstanding

Answers are:

A. What is the value for cost of goods sold?

$300

B. What is the value for interest expense?

$24.5

C. What is the value for taxes?

$73.65

D. What is the value for Addition to Retained Earnings?

$61.85

E. What is the value for common dividends per share?

$0.5