PROJECTED INCOME STATEMENT: Sales: $1,000.00 less Cost of Goods Sold and Depreciation: $500.00 EBIT: $500.00 less...

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PROJECTED INCOME STATEMENT: Sales: $1,000.00 less Cost of Goods Sold and Depreciation: $500.00 EBIT: $500.00 less...

PROJECTED INCOME STATEMENT:

Sales: $1,000.00

less Cost of Goods Sold and Depreciation: $500.00

EBIT: $500.00

less Interest Expenses: $100.00

EBT: $400.00

less Taxes: $160.00

NI: $240.00

less Common Dividends: $48.00

Addition to Retained Earnings: $192.00

Sales Growth: 25.00%

COGS & Depreciation as a % of Sales: 50.00%

Interest Growth: 0.0%

Tax Rate: 40.00%

Payout Ratio: 20.00%

Dividend Growth Rate: 31.25%

1. What is forecasted cost of goods sold?

A. $315

B. $252

C. $525

D. $625

2. What is forecasted net income?

A. $525

B. $252

C. $315

D. $625

business finance

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Answer 1

Answer #1

Forecasted Sales = 1,000*125% = $1,250

Forecasted COGS = 50% of Sales = 50%*1,250

= $625

i.e. D

2.Income Statement:

Sales	1,250
Less: COGS and Dep	625
EBIT	625
Less: Interest	100
EBT	525
Tax @40%	210
NI	315

Hence, forecasted Net Income = $315

i.e. C

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Answer 2

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