Homework Answers
9. C) Financial projections
Explanation - A pro forma contains both historical and projected data based on certain assumption where as normal financial statement consists of actual past transaction.
10. B) It may require sophisticated mathematics.
Explanation - Percentage of sales approch requires everything to be divided by sales, which doesn't involve any sophisticated mathematics.
11. D) 0.06
Explanation - growth rate = ROE × plowback ratio
= 0.10 × 0.6
= 0.06
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a. break-even a b. sensitivity analysis C. Scenario analysis d. Boolian analysis 9. Pro Forma Financial...
The Loftis Company is preparing its pro forma financial statements for the next year using this...
The Loftis Company is preparing its pro forma financial statements for the next year using this model. The abbreviated financial statements are presented below: Sales Growth 20% Tax Rate 34% Income Statement Sales $780,000 Costs 415,000 Depreciation 135,000 Interest 68,000 Taxable Income $162,000 Taxes 55,080 Net Income $106,920 Dividends 30,000 Additional Retained Earnings $76,920 Balance Sheet Assets Liabilities and Owner's Equity Current Assets $240,000 Total Debt $880,000 Net Fixed $1,350,000 Owners Equity $710,000 $1,590,000 $1,590,000 Required: A. Calculate the Parameter...
CHAPTER 4 Long- and Short-Term Financial Planning 183 *P4-17 Pro forma income statement: Scenario analysis Allen...
CHAPTER 4 Long- and Short-Term Financial Planning 183 *P4-17 Pro forma income statement: Scenario analysis Allen Products Inc. wants to do a scenario analysis for the coming year. The pessimistic prediction for sales is $900,000; the most likely amount of sales is $1,125.000; and the optimistic predic- tion is $1,280,000. Allen's income statement for the most recent year follows. Allen Products Inc. Income Statement for the Year Ended December 31, 2019 Sales revenue $937,500 Less: Cost of goods sold 421,875...
Help on my Finance homework please! Integrative: Complete ratio analysis Given the following financial statements, historical...
Help on my Finance homework please! Integrative: Complete ratio analysis Given the following financial statements, historical ratios, and industry averages, calculate Sterling Company’s financial ratios for the most recent year. (Assume a 365-day year.) Sterling Company Income Statement for the Year Ended December 31, 2019 Sales revenue $10,000,000 Less: Cost of goods sold 7,500,000 Gross profits $ 2,500,000 Less: Operating expenses Selling expense $ 300,000 General and administrative expenses 650,000 Lease expense 50,000 Depreciation expense...
Part A: Create pro forma financial statements. This spreadsheet is set up so that green cells...
Part A: Create pro forma financial
statements.
This spreadsheet is set up so that green cells contain
numbers and white cells contain formulas. Follow the steps below to
prepare proformas for 2015, assuming that New England Corp. will
make up any funding shortfall with long-term debt, and will use any
funding surplus to pay down long-term debt (i.e., let long-term
debt be the plug figure).
1. As a starting point, assume that sales growth in 2015
will be equal to...
Integrative-Pro forma statements Red Queen Restaurants wishes to prepare financial plans. Use the financial statements and...
Integrative-Pro forma statements Red Queen Restaurants wishes to prepare financial plans. Use the financial statements and the other information provided here to prepare the financial plans. The following financial data are also available: (1) The firm has estimated that its sales for 2020 will be $900,400. (2) The firm expects to pay $35,300 in cash dividends in 2020. (3) The firm wishes to maintain a minimum cash balance of $31,800. (4) Accounts receivable represent approximately 19% of annual sales. Data...
the financial plan is one of the parts of a business plan, prepare a financial plan...
the financial plan is one of the parts of a business plan, prepare a financial plan of a cow farm including the following instructions: A. Actual income statements and balance sheets. For an existing business, prepare income statements and balance sheets for the current year and for the prior 2 years. B. Pro forma income statements. Using sales forecasts and the accompanying production or operations costs, prepare proforma income statements for at least the first 3 years. C. Pro forma...
1) Earnings sensitivity analysis involves: A) always using parallel yield curve movements B) allowing asset yields...
1) Earnings sensitivity analysis involves: A) always using parallel yield curve movements B) allowing asset yields and liability costs to change by different amounts C) ignoring the impact of embedded options to make the analysis more clear D) ignoring the time at which rates on assets and liabilities change E) all of the above F) none of the above 2) If a bank has a negative duration gap, the value of its equity is expected to: A) decline if interest...
9. An analysis of company performance using DuPont analysis A sheaf of papers in her hand,...
9. An analysis of company performance using DuPont analysis A sheaf of papers in her hand, your friend and colleague, Chloe, steps into your office and asked the following. CHLOE: Do you have 10 or 15 minutes that you can spare? YOU: Sure, I've got a meeting in an hour, but I don't want to start something new and then be interrupted by the meeting, so how can I help? CHLOE: I've been reviewing the company's financial statements and looking...
thats everything that was provided 4-25. RATIO ANALYSIS The Corrigan Corporation's 2018 and 2019 financial statements...
thats everything that was provided
4-25. RATIO ANALYSIS The Corrigan Corporation's 2018 and 2019 financial statements follow, along with some industry average ratios. Corrigan is exempt from the interest deduction limitation because its average gross revenues for the prior 3 years was less than $25 million. So 100% of its interest expense is deductible. e. Assess Corrigan's market value ratios, and determine how its valuation compares with peers and how it has changed over time. Assume the firm's debt is...
Chapter 4 Analysis of Financial Statements 141 Barry Computer Company: Income Statement for Year Ended December...
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CHAPTER 4 Long- and Short-Term Financial Planning 183 *P4-17 Pro forma income statement: Scenario analysis Allen Products Inc. wants to do a scenario analysis for the coming year. The pessimistic prediction for sales is $900,000; the most likely amount of sales is $1,125.000; and the optimistic predic- tion is $1,280,000. Allen's income statement for the most recent year follows. Allen Products Inc. Income Statement for the Year Ended December 31, 2019 Sales revenue $937,500 Less: Cost of goods sold 421,875...
Part A: Create pro forma financial
statements.
This spreadsheet is set up so that green cells contain
numbers and white cells contain formulas. Follow the steps below to
prepare proformas for 2015, assuming that New England Corp. will
make up any funding shortfall with long-term debt, and will use any
funding surplus to pay down long-term debt (i.e., let long-term
debt be the plug figure).
1. As a starting point, assume that sales growth in 2015
will be equal to...
Integrative-Pro forma statements Red Queen Restaurants wishes to prepare financial plans. Use the financial statements and the other information provided here to prepare the financial plans. The following financial data are also available: (1) The firm has estimated that its sales for 2020 will be $900,400. (2) The firm expects to pay $35,300 in cash dividends in 2020. (3) The firm wishes to maintain a minimum cash balance of $31,800. (4) Accounts receivable represent approximately 19% of annual sales. Data...
9. An analysis of company performance using DuPont analysis A sheaf of papers in her hand, your friend and colleague, Chloe, steps into your office and asked the following. CHLOE: Do you have 10 or 15 minutes that you can spare? YOU: Sure, I've got a meeting in an hour, but I don't want to start something new and then be interrupted by the meeting, so how can I help? CHLOE: I've been reviewing the company's financial statements and looking...
thats everything that was provided
4-25. RATIO ANALYSIS The Corrigan Corporation's 2018 and 2019 financial statements follow, along with some industry average ratios. Corrigan is exempt from the interest deduction limitation because its average gross revenues for the prior 3 years was less than $25 million. So 100% of its interest expense is deductible. e. Assess Corrigan's market value ratios, and determine how its valuation compares with peers and how it has changed over time. Assume the firm's debt is...
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