6-4. PRO FORMA INCOME STATEMENT Austin Grocers recently reported the following 2015 income statement (in millions of dollars): $700 $500 $200 40 Sales Operating costs including depreciation ЕBIT Interest EBT Тахes (40%) Net income $160 64 Dividends Addition to retained earnings $ 96 $32 $ 64 For the coming year, the company is forecasting a 25% increase in sales, and it expects that its year- end operating costs, including depreciation, will equal 70% of sales. Austin's tax rate, interest expense, and dividend payout ratio are all expected to remain constant. a. What is Austin's projected 2016 net income? b. What is the expected growth rate in Austin's dividends?

6-4. PRO FORMA INCOME STATEMENT Austin Grocers recently reported the following 2015 income statement (in millions of dollars): $700 $500 $200 40 Sales Operating costs including depreciation ЕBIT Interest EBT Тахes (40%) Net income $160 64 Dividends Addition to retained earnings $ 96 $32 $ 64 For the coming year, the company is forecasting a 25% increase in sales, and it expects that its year- end operating costs, including depreciation, will equal 70% of sales. Austin's tax rate, interest expense, and dividend payout ratio are all expected to remain constant. a. What is Austin's projected 2016 net income? b. What is the expected growth rate in Austin's dividends?

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter9: Metric-analysis Of Financial Statements

Section: Chapter Questions

Problem 9.2.2P

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