(Using common-size financial statements) The S&H Construction Company expects to have total sales next year totaling $14,500,000. In addition, the firm paystaxes at 35 percent and will owe $306,000 in interest expense. Based on last year's operations the firm's management predicts that its cost of goods sold will be 60percent of sales and operating expenses will total 26 percent. What is your 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$$$$$

Information Provided: Sales = $14,500,000 Interest expenses = $306,000 Tax rate = 35% Cost of goods…

Answered: ent. What is your estimate of the…

Business

Finance

ent. What is your estimate of the firm's net income (after taxes) for the coming year?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter21: Supply Chains And Working Capital Management

Section: Chapter Questions

Problem 11P: Negus Enterprises has an inventory conversion period of 50 days, an average collection period of 35...

See similar textbooks

Related questions

Q: Find the monthly payment (in $) and the total interest (in $) for a mortgage of $46,000 at 5% for 40…

A: Here, To Find: Monthly payment =? Total Interest =?

Q: Swampy Ox Real Estate (SORE) has been growing at a constant 8 percent rate for many years, and it…

A: To Calculate Permanent Assets- Permanent Assets = Permanent Assets = 520*(1.08)1/2 Permanent Assets…

Q: Find the future value of this loan. $13,842 at 5.7% for 13 months

A: Principle value=13,842 Intreast rate =5.7%

Q: The maximum loss a buyer of a stock call option can suffer is equal to A. the striking price…

A: The buyer of a call option has a long position. The buyer pays a premium to buy the call options.…

Q: You, a foreign exchange dealer of your bank, are informed that your ba sold a T.T. on Copenhagen for…

A: Please see attached file in step 2 Final answer Arbitrage profit=7119

Q: Capital structure of Sun Ltd., as at 31.03.2003 was under: Particulars Equity share capital 8%…

A: Final answer Market price per share =40.65 See step by step solution

Q: 9. Which one of the following is not a condition for a valid contract? A. There must be no known…

A: A contract is valid and legally binding if it satisfies the following conditions: i) Offer- There…

Q: Chooanne D' Sexy invested in a four-year project and expect a rate of return of 10%. Information…

A: NPV that is net present value is the difference between the present value of cash flow and initial…

Q: 4. Thom J.A.M. Company has P80,000 to invest and is considering two different projects, Vlogging and…

A: The company evaluates two alternatives by comparing the net present value of projects. The company…

Q: Explain the role of government in agricultural and rural development under the following headings:…

A: Government helps the public financially for various purposes such as business, buying houses,…

Q: Dave took out a $6200 loan at 14% and eventually repaid $10,540 (principal and interest). What was…

A: Future value of amount includes the original amount and amount of interest being accumulated over…

Q: Question 3 April, 2012 as follows: Particulars Material control Ale Won-in-progress A/c Finished…

Q: A goal of financial management is to maximize the shareholders' value. What are the pros and cons of…

Q: Determine if a fixed or a floating debt rate should be used during a recession.

A: A fixed debt rate is the interest rate that remains the same over the lifetime of the debt…

Q: There is an exchange rate of 3 unicorns for 4 leprechauns. If you have 15 unicorns, how many…

A: Exchange rate of 3 unicorns = 4 leprechauns Exchange rate of 1 unicorn = 43 leprechauns

Q: Dr Musonda is struggling to repay his loan of K600,000 with payments of K12,800 made monthly in…

A: Amount of loan is K600,000 Original Loan: Monthly Payments of K12,800 Time period is 5 years…

Q: Shark Bait Rafts (SBR) would like to set up a lock box collection system that would reduce its…

A: Compounding interest means earning interest on interest. In simple words, the interest is determined…

Q: Match each potential outcome to its corresponding argument either in favor of or against the bank…

A: During 2008 crisis, the several banks failed and they requested help from the government. Government…

Q: If inflation has been running at 2.85% per year and a new car costs $31,400 today, what would it…

A: Rate of inflation per year is 2.85% Cost of Car today "Future Value" is $31,400 Time period is 3…

Q: s there any portfolio that can be constructed with stocks 1, 2, and risk-free security that will…

A: Portfolio and the purpose of constructing one! An amount intended for investment may be invested in…

Q: Consider an investment scenario where you will be choosing a portfolio of three stocks from a…

A: There are a total of 18 different stocks to choose from, and the portfolio must have three stocks.…

Q: Assuming the expectations theory is the correct theory of the term structure, calculate the interest…

A: The expectation theory of the term structure states that interest rate on long term bond will equal…

Q: With We now have a covered interest rate arbitrage Now, borrow dollars at 10%, change dollars into…

A: Concept. In covered arbitrage interest rate , favorable interest rate differentials is used to earn…

Q: Mala Prohibita Inc. is evaluating a proposal to acquire a new equipment. The equipment would require…

A: Given, The initial investment is P417,860 Cashflows is P68,000. Income tax is 32%

Q: Income Statement for the year ended December 31, 2021 Net sales $65,117 Gain on disposal of fixed…

A: A statement of cash flows is prepared to know the cash inflows and cash outflows of the company…

Q: Q1- What is a probability impact matrix? Q2- how to make a risk assessment matrix? Q3- how to use…

A: Probability impact matrix is one of most common tools in risk assessment. It is commonly used when…

Q: You are a CEO of a company. You are analyzing the performance of your company, as a comparison to…

A: “Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first…

Q: LinkedIn suffered a large drop in share value following an unexpectedly weak forecast of their…

A: We have to explain why an unexpectedly weak forecast of their future earnings cause investors to…

Q: Analyze and compare the following firms financial ratio results. Which seems to be in a better…

A: The financial ratio refers to the computation of the company’s level of performance compared with…

Q: c). If the father decides to deposit a single amount now instead of K300 at the end of each month,…

A: Data given: FV= k 24,500.90 [as computed in (a) ] r=12% p.a. (assumed compounded annually) n= 17-12…

Q: maximise your shareholder wealth?

A: Shareholders are generally the owners of the Company. Increasing wealth maximisation means…

Q: A professional investor that you know makes the following observation about the assets on his…

A: Hindsight bias is when the investor overestimates his predictive abilities and try to reason saying…

Q: Make three observations in each section - Assets, Liabilities and Net Worth, and Selected Financial…

A: Observations are used to bring significant issues to the attention of audit managers. While…

Q: A budget is a way of

A: A financial budget is prediction of expenses and income for a future period of time. Business…

Q: Pro-Forma Income Statement Sales Cost of goods sold Gross profit Operating expenses Net operating…

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

Q: 5. Find the present worth of a future payment of 100,000 to be made in 10 years with an interest of…

A: The present value: The value of a sum of money to be received or paid at some point time in the…

Q: What was the closing value of the S&P500 index on Oct 14, 2020? Look it up online. Include 2…

A: The S&P 500, is a stock market index tracking the stock performance of 500 large companies…

Q: Consider the following fixed borrowing rates available to Grey Corp and to Brady Corp in both the…

A: Interest Rate Swap: A rate derivative is an interest rate swap. It involves two people exchanging…

Q: What does Beta measure and how is it interpreted? Explain the beta values of TSLA and JPM by…

A: In the financial market, the risk is categorized into two parts one is systematic and the second is…

Q: Mosaic is evaluating a manufacturing plant that has the potential to generate revenue of $2…

A: Given: Particulars Amount in Millions Stock price $2 Up price % 20.00% Lower price % 25.00%…

Q: Firm Z has invested $4 million in marketing campaign to assess the demand for the product Minish.…

A: NPV is defined as the sum of the present values of all future cash inflows less the sum of the…

Q: 6. Intention to create legal relations are presumed in which of the following relationships. In the…

A: Legal relations between the two or more parties can be created with the presence of mutual…

Q: What is the profitability index for an investment with the following cash flows given a 20 percent…

A: The Profitability Index(PI) is one of the capital budgeting techniques that take into consideration…

Q: A Brazillian coffee exporter has found a market for his coffee to the tune of 1,800,000 Euros. At…

A: Interest rate parity With spot rate (S=in currency ksh per euro), interest rate in Kenya (ik),…

Q: Miguel purchased a hot tub costing $5,070 by taking out an installment loan. He made a down payment…

A: APR (Annual Percentage Return) The rate of interest charged by a creditor on the amount lent or the…

Q: An investor requires an annual (year-end) income of $15,000 in perpetuity. Assuming a fixed rate of…

A: Information Provided: Annual income = $15,000 Interest rate = 4% NOTE: As per our policy, we…

Q: 4. Thom J.A.M. Company has P80,000 to invest and is considering two different projects, Vlogging and…

A: Net present value(NPV) of the project is calculated using following equation NPV = -CF0 +…

Q: Consider the following information: Cash Flows ($) Project C0 C1 C2 C3 C4 A –5,300 1,300 1,300…

A: Several projects have been given. We have to find their payback period. Payback period is the time…

Q: The following information is extracted from Pinnacle Bank's balance sheet (all numbers are in…

A: Liquidity Coverage Ratio The ratio that indicates the ability of a financial institution to keep…

Q: 1. Suppose you borrow $16,000. The interest rate is 10%, and it requires 4 equal end-of-year…

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Question

(Using common-size financial statements) The S&H Construction Company expects to have total sales next year totaling $14,500,000. In addition, the firm pays
taxes at 35 percent and will owe $306,000 in interest expense. Based on last year's operations the firm's management predicts that its cost of goods sold will be 60
percent of sales and operating expenses will total 26 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
$
$
$
$
$

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

Step 2

Step 3

Step 4

Trending now

This is a popular solution!

Step by step

Solved in 4 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

The Berndt Corporation expects to have sales of 12 million. Costs other than depreciation are expected to be 75% of sales, and depreciation is expected to be 1.5 million. All sales revenues will be collected in cash, and costs other than depreciation must be paid for during the year. Berndts federal-plus-state tax rate is 40%. Berndt has no debt. a. Set up an income statement. What is Berndts expected net income? Its expected net cash flow? b. Suppose Congress changed the tax laws so that Berndts depreciation expenses doubled. No changes in operations occurred. What would happen to reported profit and to net cash flow? c. Now suppose that Congress changed the tax laws such that, instead of doubling Berndts depreciation, it was reduced by 50%. How would profit and net cash flow be affected? d. If this were your company, would you prefer Congress to cause your depreciation expense to be doubled or halved? Why?
Payne Products had $1.6 million in sales revenues in the most recent year and expects sales growth to be 25% this year. Payne would like to determine the effect of various current assets policies on its financial performance. Payne has $1 million of fixed assets and intends to keep its debt ratio at its historical level of 60%. Payne’s debt interest rate is currently 8%. You are to evaluate three different current asset policies: (1) a restricted policy in which current assets are 45% of projected sales, (2) a moderate policy with 50% of sales tied up in current assets, and (3) a relaxed policy requiring current assets of 60% of sales. Earnings before interest and taxes are expected to be 12% of sales. Payne’s tax rate is 40%. What is the expected return on equity under each current asset level? In this problem, we have assumed that the level of expected sales is independent of current asset policy. Is this a valid assumption? Why or why not? How would the overall risk of the firm vary under each policy?
Ogier Incorporated currently has $800 million in sales, which are projected to grow by 10% in Year 1 and by 5% in Year 2. Its operating profitability ratio (OP) is 10%, and its capital requirement ratio (CR) is 80%? What are the projected sales in Years 1 and 2? What are the projected amounts of net operating profit after taxes (NOPAT) for Years 1 and 2? What are the projected amounts of total net operating capital (OpCap) for Years 1 and 2? What is the projected FCF for Year 2?
The Kretovich Company had a quick ratio of 1.4, a current ratio of 3.0, a days’ sales outstanding of 36.5 days (based on a 365-day year), total current assets of $810,000, and cash and marketable securities of $120,000. What were Kretovich’s annual sales?
Strickler Technology is considering changes in its working capital policies to improve its cash flow cycle. Stricklers sales last year were 3,250,000 (all on credit), and its net profit margin was 7%. Its inventory turnover was 6.0 times during the year, and its DSO was 41 days. Its annual cost of goods sold was 1,800,000. The firm had fixed assets totaling 535,000. Stricklers payables deferral period is 45 days. a. Calculate Stricklers cash conversion cycle. b. Assuming Strickler holds negligible amounts of cash and marketable securities, calculate its total assets turnover and ROA. c. Suppose Stricklers managers believe the annual inventory turnover can be raised to 9 times without affecting sale or profit margins. What would Stricklers cash conversion cycle, total assets turnover, and ROA have been if the inventory turnover had been 9 for the year?
Brandt Corporation had sales revenue of 500,000 for the current year. For the year, its cost of goods sold was 240,000, its operating expenses were 50,000, its interest revenue was 2,000, and its interest expense was 12,000. Brandts income tax rate is 30%. Prepare Brandts multiple-step income statement for the current year.