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- Ricardo Entertainment recently reported the following income statement:Sales 12,000,000Cost of goods sold 7,500,000EBIT 4,500,000Interest 1,500,000EBT 3,000,000Taxes (40%) 1,200,000Net income 1,800,000The company’s CFO, Fred Mertz, wants to see a 25 percent increase in net income over the next year.In other words, his target for next year’s net income is $2,250,000. Mertz has made the followingobservations: Ricardo’s operating margin (EBIT/Sales) was 37.5 percent this past year. Mertz expects thatnext year this margin will increase to 40 percent. Ricardo’s interest expense is expected to remain constant. Ricardo’s tax rate is expected to remain at 40 percent.On the basis of these numbers, what is the percentage increase in sales that Ricardo needs in order tomeet Mertz’s target for net income?Dopey, Inc., a national clothing chain had sales of P 300 million last year. The business has a steady net profit margin of 8 percent and a dividend payout ratio of 25 percent. The statement of financial position for the end of last year is shown next. Statement of Financial Position End of Year (P millions) Assets Liabilities and Stockholders' Equity Cash................................P 20 Accounts payable.........................P 70 Accounts receivable......... 25 Accrued expenses......................... 20 Inventory.......................... 75 Other payables............................. 30 Plant and Equipment......... 120 Common stock.............................. 40 Retained Earnings.......................... 80 Total Liabilities and Total assets.......................P 240 stockholders'' equity..................P 240 The company's marketing staff has told the president that in the coming years there will be large increase in the demand for…The Optical scam company has forecast a sales growth of 20 percent for next year. The current financial statements are shown below: What is pro forma balance sheet for next year? Sales $ 31,600,000 Costs 26,675,500 Taxable income $ 4,924,500 Taxes 1,723,575 Net income $ 3,200,925 Dividends $ 1,280,370 Addition to retained earnings 1,920,555 Balance Sheet Assets Liabilities and Owners' Equity Current assets $ 7,320,000 Accounts payable $ 5,688,000 Long-term debt 6,636,000 Fixed assets 20,172,000 Common stock $ 1,594,000 Accumulated retained earnings 13,574,000 Total equity $ 15,168,000 Total assets $ 27,492,000 Total liabilities and equity
- Owen’s Electronics has nine operating plants in seven southwestern states. Sales for last year were $100 million, and the balance sheet at year-end is similar in percentage of sales to that of previous years (and this will continue in the future). All assets (including fixed assets) and current liabilities will vary directly with sales. The firm is working at full capacity. Balance Sheet(in $ millions) Assets Liabilities and Stockholders' Equity Cash $ 14 Accounts payable $ 25 Accounts receivable 30 Accrued wages 12 Inventory 31 Accrued taxes 16 Current assets $ 75 Current liabilities $ 53 Fixed assets 48 Notes payable 20 Common stock 23 Retained earnings 27 Total assets $ 123 Total liabilities and stockholders' equity $ 123 Owen’s Electronics has an aftertax profit margin of 7 percent and a dividend payout ratio of 40 percent. If sales grow by 30 percent next year, determine how many dollars of new funds are needed to finance…Owen’s Electronics has nine operating plants in seven southwestern states. Sales for last year were $100 million, and the balance sheet at year-end is similar in percentage of sales to that of previous years (and this will continue in the future). All assets (including fixed assets) and current liabilities will vary directly with sales. The firm is working at full capacity. Balance Sheet (in $ millions) Assets Liabilities and Stockholders' Equity Cash $ 15 Accounts payable $ 17 Accounts receivable 31 Accrued wages 3 Inventory 32 Accrued taxes 12 Current assets $ 78 Current liabilities $ 32 Fixed assets 46 Notes payable 15 Common stock 18 Retained earnings 59 Total assets $ 124 Total liabilities and stockholders' equity $ 124 Owen’s Electronics has an aftertax profit margin of 8 percent and a dividend payout ratio of 45 percent. If sales grow by 20 percent next year, determine how many dollars of new funds are needed to finance the growth. (Do not round intermediate calculations. Enter…Owen’s Electronics has nine operating plants in seven southwestern states. Sales for last year were $100 million, and the balance sheet at year-end is similar in percentage of sales to that of previous years (and this will continue in the future). All assets (including fixed assets) and current liabilities will vary directly with sales. The firm is working at full capacity. Balance Sheet(in $ millions) Assets Liabilities and Stockholders' Equity Cash $ 7 Accounts payable $ 20 Accounts receivable 25 Accrued wages 7 Inventory 28 Accrued taxes 13 Current assets $ 60 Current liabilities $ 40 Fixed assets 45 Notes payable 15 Common stock 20 Retained earnings 30 Total assets $ 105 Total liabilities and stockholders' equity $ 105 Owen’s Electronics has an aftertax profit margin of 10 percent and a dividend payout ratio of 45 percent. If sales grow by 20 percent next year, determine how many dollars of new funds are needed to…
- Lux Co. recently reported sales of P100 million, and net income equal to P5 million. The company has P70 million in total assets. Over the next year, the company is forecasting a 25 percent increase in sales. Since the company is at full capacity, its assets must increase in proportion to sales. The company also estimates that if sales increase 20 percent, spontaneous liabilities will increase by P2.1 million. If the company’s sales increase, its profit margin will remain at its current level. The company’s dividend payout ratio is 45 percent. Based on the AFN formula, how much additional capital must the company raise in order to support the 20 percent increase in sales?Conn Man’s Shops, a national clothing chain, had sales of $400 million last year. The business has a steady net profit margin of 9 percent and a dividend payout ratio of 25 percent. The balance sheet for the end of last year is shown. Balance SheetEnd of Year(in $ millions) Assets Liabilities and Stockholders' Equity Cash $ 30 Accounts payable $ 71 Accounts receivable 45 Accrued expenses 50 Inventory 87 Other payables 63 Plant and equipment 118 Common stock 60 Retained earnings 36 Total assets $ 280 Total liabilities and stockholders' equity $ 280 The firm's marketing staff has told the president that in the coming year there will be a large increase in the demand for overcoats and wool slacks. A sales increase of 20 percent is forecast for the company. All balance sheet items are expected to maintain the same percent-of-sales relationships as last year,* except for common stock and retained earnings. No change is scheduled in the number…Conn Man’s Shops, a national clothing chain, had sales of $370 million last year. The business has a steady net profit margin of 7 percent and a dividend payout ratio of 30 percent. The balance sheet for the end of last year is shown. Balance SheetEnd of Year(in $ millions) Assets Liabilities and Stockholders' Equity Cash $ 27 Accounts payable $ 71 Accounts receivable 42 Accrued expenses 37 Inventory 84 Other payables 40 Plant and equipment 180 Common stock 54 Retained earnings 131 Total assets $ 333 Total liabilities and stockholders' equity $ 333 The firm's marketing staff has told the president that in the coming year there will be a large increase in the demand for overcoats and wool slacks. A sales increase of 10 percent is forecast for the company. All balance sheet items are expected to maintain the same percent-of-sales relationships as last year,* except for common stock and retained earnings. No change is scheduled in the number…
- Cheryl Colby, CFO of Charming Florist Ltd., has created the firm’s pro forma balance sheet for the next fiscal year. Sales are projected to grow by 15 percent to $179.4 million. Current assets, fixed assets, and short-term debt are 20 percent, 90 percent, and 15 percent of sales, respectively. The company pays out 40 percent of its net income in dividends. The company currently has $27.2 million of long-term debt, and $13 million in common stock par value. The profit margin is 10 percent. Prepare the current balance sheet for the firm using the projected sales figure. Based on the sales growth forecast, how much does the company need in external funds for the upcoming fiscal yearBulldogs Inc. recently reported net income of P5,000,0000. The firm has P40,000,000 total assets. Next year, National Inc. is forecasting a 20% increase in sales. The firm also estimates that if sales increase by 20%, spontaneous liabilities will increase by P950,000. The retention ratio is maintained at 75%. If the sales increase, the profit margin will remain at its current level. The company is operating at full capacity. How much is the increase in retained earnings that will contribute to cover the increase in asset? A. 4,500,000 B. 36,000,000 C. 750,000 D. 3,750,000The Eagle Machine Company averaged $2 million in inventory last year, and the cost of goods sold was $10 million. Figure shows the breakout of raw materials, work-in-process, and finished goods inventories. The best inventory turnover in the company’s industry is six turns per year. If the company has 52 business weeks per year, how many weeks of supply were held in inventory? What was the inventory turnover? What should the company do?