Question

The most recent financial statements for Hopington Tours Inc. follow. Sales for 2018 are projected to grow by 25%. 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. The firm is operating at full capacity and no new debt or equity is issued.

 

HOPINGTON TOURS INC. 2017 Statement of Comprehensive Income
Sales			$	763,000
Costs				598,000
Other expenses				19,000
Earnings before interest and taxes			$	146,000
Interest paid				10,000
Taxable income			$	136,000
Taxes (35%)				47,600
Net income			$	88,400
Dividends	$	21,760
Addition to retained earnings		66,640

 

HOPINGTON TOURS INC. Statement of Financial Position as of December 31, 2017
Assets			Liabilities and Owners’ Equity
Current assets			Current liabilities
Cash	$	27,300	Accounts payable	$	70,000
Accounts receivable		42,700	Notes payable		19,000
Inventory		88,900	Total	$	89,000
Total	$	158,900	Long-term debt	$	146,000
			Owners’ equity
Fixed assets			Common stock and paid-in surplus	$	132,000
Net plant and equipment	$	270,000	Retained earnings		61,900
			Total	$	193,900
Total assets	$	428,900	Total liabilities and owners’ equity	$	428,900

 

Complete the pro forma statement of comprehensive income below. (Input all amounts as positive values. Omit $ sign in your response.)

 

HOPINGTON TOURS INC. Pro Forma Statement of Comprehensive Income
	25 % Sales Growth
Sales	$
Costs
Other expenses
EBIT	$
Interest
Taxable income	$
Taxes (35%)
Net income	$
Dividends	$
Add. to RE

 

Complete the pro forma statement of financial position below.

 

HOPINGTON TOURS INC. Pro Forma Statement of Financial Position
Assets		Liabilities and Owners’ Equity
Current assets		Current liabilities
Cash	$	Accounts payable	$
Accounts receivable	$	Notes payable	$
Inventory	$	Total	$
Total	$	Long-term debt	$
		Owners’ equity
Fixed assets		Common stock and paid-in surplus	$
Net plant and equipment	$	Retained earnings	$
		Total	$
Total assets	$	Total liabilities and owners’ equity	$

 

Calculate the EFN for 25% growth rates.

 

	25%
EFN	$