![Problem 4-27 EFN and Internal Growth [LO2, 3] The most recent financial statements for Crosby, Inc., follow. Interest expense](http://img.homeworklib.com/questions/d1301140-7a1b-11ea-93a5-315620a309ef.png?x-oss-process=image/resize,w_560)
Homework Answers
Preparing the Pro formo Income Statement:
| Pro Forma Income Statement | |||
| Particular | 20% Sales Growth | 25% Sales Growth | 30% Sales Growth |
| Sales [sales(1+% Increase)] | 906000 | 943750 | 981500 |
| Less: Costs | 733200 | 763750 | 794300 |
| Less: Other costs | 30000 | 31250 | 32500 |
| Earning Before Interest & Taxes | 142800 | 148750 | 154700 |
| Less: Interest paid [remain constant] | 10800 | 10800 | 10800 |
| Taxable Income | 132000 | 137950 | 143900 |
| Less : Tax@22% | 29040 | 30349 | 31658 |
| Net Income | 102960 | 107601 | 112242 |
| Dividends* @37.7269% | 38843.62 | 40594.52 | 42345.43 |
| Additions to Retained Earnings | 64116.38 | 67006.48 | 69896.57 |
*- Dividend Payout Ratio = Dividend/Net Income ;= 31840/84396
= 37.7269%
b). EFN = Total assets*(% change in forecasted Sales) - Spontaneous Liability*(% change in forecasted Sales) - Additions to Retained Earnings
Calculating EFN for 20, 25 & 30 percent sales growth using above formula:-
-- EFN for 20% growth = (340920*20%)-(58200*20%)-64116.38
= 68184 - 11640 - 64116.38
= -$7572.38
-- EFN for 25% growth = (340920*25%)-(58200*25%)-67006.48
= 85230 - 14550 - 67006.48
= $3673.52
-- EFN for 30% growth = (340920*30%)-(58200*30%)-69896.57
= 102276 - 17460 -69896.57
= $14919.43
If you need any clarification regarding this solution, then you can ask in comments
If you like my answer then please Up-vote as it will be motivating.
Add Answer to:
Problem 4-27 EFN and Internal Growth [LO2, 3] The most recent financial statements for Crosby, Inc.,...
The most recent financial statements for Crosby, Inc., follow. Sales for 2018 are projected to grow...
The most recent financial statements for Crosby, Inc., follow. Sales for 2018 are projected to grow by 25 percent. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, fixed assets, and accounts payable Increase spontaneously with sales. CROSBY, INC 2017 Income Statement Sales $755,000 Costs 611,000 Other expenses 25,000 Earnings before interest $ 119,000 and taxes Interest pald 10,800 Taxable income Taxes (22%) $ 108,200 23,804 Net...
The most recent financial statements for Crosby, Inc., follow. Interest expense will remain constant, the tax...
The most recent financial statements for Crosby, Inc., follow. Interest expense will remain constant, the tax rate and the dividend payout rate will also rem other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales. Assume the firm is operating at full capacity and the debt- equity ratio is held constant. CROSBY, INC. 2017 Income Statement Sales Costs Other expenses $755,000 611,000 25,000 Earnings before interest and taxes Interest paid $ 119,000 10,800 Taxable income Taxes (22%)...
The most recent financial statements for Crosby, Inc., follow. Interest expense will remain constant, the tax...
The most recent financial statements for Crosby, Inc., follow. Interest expense will remain constant, the tax rate and the dividend payout rate will also remain constant. Costs. other expenses current assets, fixed assets and accounts payable increase spontaneously with sales. Assume the firm is operating at full capacity and the debt equity ratio is held constant. CROSBY, INC. 2017 Income Statement Sales Costs Other expenses $755,000 611,000 25.000 Earnings before interest and taxes Interest paid $ 119,000 10,800 Taxable income...
Saved Help Save & Problem 4-24 Calculating EFN [LO2 The most recent financial statements for Crosby,...
Saved Help Save & Problem 4-24 Calculating EFN [LO2 The most recent financial statements for Crosby, Inc., follow. Sales for 2018 are projected to grow by 25 percent Interest expense will remain constant, the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales. CROSBY, INC 2017 Income Statement Sales Costs Other expenses $748 000 583.000 19.000 Earnings before interest and taxes Interest paid $...
The most recent financial statements for Crosby, Inc., follow. Interest expense will remain constant the tax...
The most recent financial statements for Crosby, Inc., follow. Interest expense will remain constant the tax rate and the dividend payout rate will also remain constant Costs other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales. CROSBY, INC. 2017 Income Statement Sales $761,000 Costs 617,000 Other expenses 28,000 Earnings before interest and taxes Interest paid $ 116,000 13,200 Taxable income Taxes (23%) $102,800 23,644 Net income $ 79.156 Dividends Addition to retained earnings $27,640 51,516 CROSBY,...
The most recent financial statements for Crosby, Inc., follow. Interest expense will remain constant; the tax...
The most recent financial statements for Crosby, Inc., follow.
Interest expense will remain constant; the tax rate and the
dividend payout rate will also remain constant. Costs, other
expenses, current assets, fixed assets, and accounts payable
increase spontaneously with sales.
CROSBY, INC. 2017 Income Statement Sales Costs Other expenses $ 767,000 623,000 31,000 Earnings before interest and taxes Interest paid $ 113,000 15,600 Taxable income Taxes (24%) $ 97,400 23,376 Net income $ 74,024 Dividends Addition to retained earnings $23,440...
The most recent financial statements for Crosby, Inc., follow. Interest expense will remain constant; the tax...
The most recent financial statements for Crosby, Inc., follow. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales. Assume the firm is operating at full capacity and the debt- equity ratio is held constant. CROSBY, INC. 2017 Income Statement $763,000 619,000 29,000 Sales Costs Other expenses Earnings before interest and taxes $115,000 Interest paid 14,000 $101,000 25,250 Taxable...
The most recent financial statements for Crosby, Inc., follow. Interest expense will remain constant; the tax...
The most recent financial statements for Crosby, Inc., follow. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales. CROSBY, INC. 2017 Income Statement Sales Costs Other expenses $ 772,000 628,000 33,500 Earnings before interest and taxes Interest paid $ 110,500 17,600 Taxable income Taxes (24%) $ 92,900 22.296 Net income $ 70,604 Dividends Addition to retained earnings $...
The most recent financial statements for Crosby, Inc., follow. Sales for 2018 are projected to grow...
The most recent financial statements for Crosby, Inc., follow. Sales for 2018 are projected to grow by 20 percent. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, and accounts payable increase spontaneously with sales. CROSBY, INC. 2017 Income Statement Sales Costs Other expenses $750,000 585,000 21,000 Earnings before interest $144,000 17000 127,000 and taxes Interest paid Taxable income Taxes (2296) 27,940 Net income 99,060 29,718 Dividends...
The most recent financial statements for Crosby, Inc., follow. Sales for 2018 are projected to grow...
The most recent financial statements for Crosby, Inc., follow. Sales for 2018 are projected to grow by 30 percent. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, and accounts payable increase spontaneously with sales. CROSBY, INC. 2017 Income Statement Sales Costs Other expenses $752,000 587,000 23,000 Earnings before interest and taxes Interest paid $ 142,000 19,000 Taxable income Taxes (24%) $ 123,000 29.520 Net Income $...
The most recent financial statements for Crosby, Inc., follow. Sales for 2018 are projected to grow by 25 percent. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, fixed assets, and accounts payable Increase spontaneously with sales. CROSBY, INC 2017 Income Statement Sales $755,000 Costs 611,000 Other expenses 25,000 Earnings before interest $ 119,000 and taxes Interest pald 10,800 Taxable income Taxes (22%) $ 108,200 23,804 Net...
The most recent financial statements for Crosby, Inc., follow. Interest expense will remain constant, the tax rate and the dividend payout rate will also rem other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales. Assume the firm is operating at full capacity and the debt- equity ratio is held constant. CROSBY, INC. 2017 Income Statement Sales Costs Other expenses $755,000 611,000 25,000 Earnings before interest and taxes Interest paid $ 119,000 10,800 Taxable income Taxes (22%)...
The most recent financial statements for Crosby, Inc., follow. Interest expense will remain constant, the tax rate and the dividend payout rate will also remain constant. Costs. other expenses current assets, fixed assets and accounts payable increase spontaneously with sales. Assume the firm is operating at full capacity and the debt equity ratio is held constant. CROSBY, INC. 2017 Income Statement Sales Costs Other expenses $755,000 611,000 25.000 Earnings before interest and taxes Interest paid $ 119,000 10,800 Taxable income...
Saved Help Save & Problem 4-24 Calculating EFN [LO2 The most recent financial statements for Crosby, Inc., follow. Sales for 2018 are projected to grow by 25 percent Interest expense will remain constant, the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales. CROSBY, INC 2017 Income Statement Sales Costs Other expenses $748 000 583.000 19.000 Earnings before interest and taxes Interest paid $...
The most recent financial statements for Crosby, Inc., follow. Interest expense will remain constant the tax rate and the dividend payout rate will also remain constant Costs other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales. CROSBY, INC. 2017 Income Statement Sales $761,000 Costs 617,000 Other expenses 28,000 Earnings before interest and taxes Interest paid $ 116,000 13,200 Taxable income Taxes (23%) $102,800 23,644 Net income $ 79.156 Dividends Addition to retained earnings $27,640 51,516 CROSBY,...
The most recent financial statements for Crosby, Inc., follow.
Interest expense will remain constant; the tax rate and the
dividend payout rate will also remain constant. Costs, other
expenses, current assets, fixed assets, and accounts payable
increase spontaneously with sales.
CROSBY, INC. 2017 Income Statement Sales Costs Other expenses $ 767,000 623,000 31,000 Earnings before interest and taxes Interest paid $ 113,000 15,600 Taxable income Taxes (24%) $ 97,400 23,376 Net income $ 74,024 Dividends Addition to retained earnings $23,440...
The most recent financial statements for Crosby, Inc., follow. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales. Assume the firm is operating at full capacity and the debt- equity ratio is held constant. CROSBY, INC. 2017 Income Statement $763,000 619,000 29,000 Sales Costs Other expenses Earnings before interest and taxes $115,000 Interest paid 14,000 $101,000 25,250 Taxable...
The most recent financial statements for Crosby, Inc., follow. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales. CROSBY, INC. 2017 Income Statement Sales Costs Other expenses $ 772,000 628,000 33,500 Earnings before interest and taxes Interest paid $ 110,500 17,600 Taxable income Taxes (24%) $ 92,900 22.296 Net income $ 70,604 Dividends Addition to retained earnings $...
The most recent financial statements for Crosby, Inc., follow. Sales for 2018 are projected to grow by 20 percent. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, and accounts payable increase spontaneously with sales. CROSBY, INC. 2017 Income Statement Sales Costs Other expenses $750,000 585,000 21,000 Earnings before interest $144,000 17000 127,000 and taxes Interest paid Taxable income Taxes (2296) 27,940 Net income 99,060 29,718 Dividends...
The most recent financial statements for Crosby, Inc., follow. Sales for 2018 are projected to grow by 30 percent. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, and accounts payable increase spontaneously with sales. CROSBY, INC. 2017 Income Statement Sales Costs Other expenses $752,000 587,000 23,000 Earnings before interest and taxes Interest paid $ 142,000 19,000 Taxable income Taxes (24%) $ 123,000 29.520 Net Income $...
Most questions answered within 3 hours.
-
Can you figure out if any R functions used to subset a time
series 1 or...
asked 3 minutes ago -
Which of the following is correct?
A. APC + MPS = 1
B. APS + MPS...
asked 15 minutes ago -
Given a regression sum of squares equal to 2373.59 and a total
sum of squares equal...
asked 1 hour ago -
Compare and contrast the linear motion and angular motion
equations F ma and . That is,...
asked 1 hour ago -
Now that this course has taken you on a journey of introduction
to the world of...
asked 1 hour ago -
The sandwich maker of the EE-Cole-Eye Sandwich Truck was just
fired (for a reason described below)...
asked 4 hours ago -
Name the following coordination compounds using systematic
nomenclature.
1. [Co(H2O)6]Cl2:
2. [Cr(NH3)6](NO3)3:
3. K4[Fe(CN)6]:
4. Na[Au(CN)4]:...
asked 3 hours ago -
Propose an efficient synthesis of 2-Bromo-5-nitrotoluene from
benzene. Hint: 3 steps. Consider directing effects of substituents....
asked 5 hours ago -
This assignment will explore the impact of corporate decisions
on a local versus a global perspective....
asked 4 hours ago -
Given the function below, F(w,x,y,z)= x’z+w’z’+w’y
a) draw a logic diagram for an implementation which uses...
asked 4 hours ago -
Most political philosophers believe we have a duty to obey laws,
even if the laws in...
asked 5 hours ago -
Which of the following are common negotiation outcome
mistakes?
a. Leave money on the table b....
asked 5 hours ago