(Using common-size financial statements) The S&H Construction Company expects to have total sales next year totaling $14,800,000. In addition, the firm pays taxes at 35 percent and will owe$307,000 in interest expense. Based on last year's operations the firm's management predicts that its cost of goods sold will be 62 percent of sales and operating expenses will total 33 percent. What isyour estimate of the firm's net income (after taxes) for the coming year?Pro-Forma Income StatementSalesCost of goods soldGross profitOperating expensesNet operating incomeInterest expenseEarnings before taxesTaxesNet income$$$$14800000(9424000)5376000(4884000)(307000)(5180000)

calculation of cost of goods sold = 62% of 14800000 = $ 9176000 calculation of sales and operating…

Pro-Forma Income Statement Sales Cost of goods sold Gross profit Operating expenses Net operating income Interest expense Earnings before taxes Taxes Net income $ S S 14800000 (9424000) 5376000 (4884000) (307000) (5180000)

Pro-Forma Income Statement Sales Cost of goods sold Gross profit Operating expenses Net operating income Interest expense Earnings before taxes Taxes Net income $ S S 14800000 (9424000) 5376000 (4884000) (307000) (5180000)

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter12: Corporate Valuation And Financial Planning

Section: Chapter Questions

Problem 9P

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Basic Accounting Terms

Accounting terms are accounting terminology, accounting jargon, accounting acronyms, and accounting vocabulary that are commonly used to understand accounting fundamentals. It would be difficult for anyone to read, understand, and interpret the company's financial statements if they did not understand and know the meaning of the basic accounting terms.

Question

(Using common-size financial statements) The S&H Construction Company expects to have total sales next year totaling $14,800,000. In addition, the firm pays taxes at 35 percent and will owe
$307,000 in interest expense. Based on last year's operations the firm's management predicts that its cost of goods sold will be 62 percent of sales and operating expenses will total 33 percent. What is
your estimate of the firm's net income (after taxes) for the coming year?
Pro-Forma Income Statement
Sales
Cost of goods sold
Gross profit
Operating expenses
Net operating income
Interest expense
Earnings before taxes
Taxes
Net income
$
$
$
$
14800000
(9424000)
5376000
(4884000)
(307000)
(5180000)

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