StatementsPro Forma Financial StatementsIncome StatementSalesCosts Except DepreciationEBITDADepreciationEBITInterest Expense (net)Pre-tax IncomeIncome TaxNet Income$214,163(110,332)$103,831(6,535)$97,295(628)$96,668(33,834)$62.834Balance SheetAssetsCash and EquivalentsAccounts ReceivableInventoriesTotal Current AssetsProperty, Plant, and EquipmentTotal AssetsLiabilities and EquityAccounts PayableDebtTotal LiabilitiesStockholders' EquityTotal Liabilities and Equity$16,5302,2044,430$23,16410,921$34,085$1,7193,900$5,619$34,493$40,1121x Based on Jim's expectation of 10.2% sales growth and payout ratio of 85.64% of net income next year, Jim developed the pro forma financial statements given below. What will be the amount of netnew financing needed for Jim's Espresso?Click the icon to view the pro forma financial statements.(Select from the drop-down menu)The total newfinancing will be $(Round to the nearest dollar)requiredexcess

The company needs to increase sales and profits of the company and for that there is need of…

Answered: Pro Forma Financial Statements income…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter22: Providing And Obtaining Credit

Section: Chapter Questions

Problem 2MC

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Poleski Manufacturing, which maintains the same level of inventory at the end of each year, provided the following information about expenses anticipated for next year: The selling price of Poleskis single product is 16. In recent years, profits have fallen and Poleskis management is now considering a number of alternatives. Poleski wants to have a net income next year of 250,000, but expects to sell only 120,000 units unless some changes are made. The president of Poleski has asked you to calculate the companys projected net income (assuming 120,000 units are sold) and the sales needed to achieve the companys net income objective for next year. Also, compute Poleskis contribution margin per unit, contribution margin ratio, and break-even point for next year. The worksheet CVP has been provided to assist you. Note that the data from the problem have already been entered into the Data Section of the worksheet.
The S&H construction company expects to have total sales next year totaling $15,300. In addition, the firm pays taxes at 35 percent and will owe $280,000 in interest expense. Based on last year’s operations the firm’s management predicts that its cost of goods sold will be 57 percent of sales and operating expenses will total 32 percent. What is your estimate of firm’s net income after taxes for the coming year? Complete the forma income statement below Round to the nearest dollar Pro-forma income statement Sales Cost of goods sold Gross profit Operating expenses Net operating income Interest expenses Earnings before taxes Taxes Net income
Pearson International Publishing Company is trying to decide whether torevise its popular textbook, Fundamental of Corporate Finance. The companyhas estimated that the revision will cost RM65,000. Cash flows for the firstyear is RM18,000 and it will increase by 4 percent per year. The book will berevised back after five years. The initial costs are paid now, and revenues arereceived at the end of each year. If the company requires a 10 percent returnfor the investment, should it undertake the revision.
You are a consultant who has been hired to evaluate a new product line for Markum Enterprises. The upfront investment required to launch the product line is $7 million. The product will generate free cash flow of $0.76 million the first year, and this free cash flow is expected to grow at a rate of 6% per year. Markum has an equity cost of capital of 10.9%, a debt cost of capital of 5.35%, and a tax rate of 42%. Markum maintains a debt-equity ratio of 0.40. What is the NPV of the new product line (including any tax shields from leverage)? (Round to two decimalplaces.) How much debt will Markum initially take on as a result of launching this product line? (Round to two decimalplaces.) How much of the product line's value is attributable to the present value of interest tax shields? (Round to two decimalplaces.)
CelebNav, Inc. had sales last year of $750,000 and the analysts are predicting a good year for the start up, with sales growing 21 percent a year for the next 3 years. After that, the sales should grow 12 percent per year for another two years, at which time the owners are planning on selling the company. What are the projected sales for the last year before the sale? (Round intermediate calculations to 6 decimal places, in all cases round your final answer to the nearest penny.) Projected sales in year 5 $
The S&H construction company expects to have total sales next year totaling $14,500,00 In addition, the firm pays taxes at 35 percent and will owe $318,000 in interest expenses. Based on last year’s operations the firm’s management predicts that its cost of goods sold will be 58 percent of sales and operating expenses will total 32 percent. What is your estimate of the firm’s net income after taxes for the coming year ? Complete the pro-forma income statement below Round to the nearest dollar Pro-forma income statement Sales Cost of goods sold Gross profit Operating expenses Net operating expenses Interested expenses Earnings before taxes Taxes Net income
Karen Lamont is in the process of starting a new business and wants to forecast the first year's income statement and balance sheet. She has made several assumptions, which are shown below: Lamont has projected the firm's sales will be $1 million in the first year. She believes that the operating and gross profit margins will be 20 percent and 50 percent, respectively. For working capital, Lamont has estimated the following: Accounts receivable as a percentage of sales: 12% Inventory as a percentage of sales: 15% Accounts payable as a percentage of sales: 7% Accruals as a percentage of sales: 5% A bank has agreed to loan her $300,000, consisting of $100,000 in short-term debt and $200,000 in long-term debt. Both loans will have an 8 percent interest rate. The firm's tax rate will be 30 percent. Lamont will need to purchase $350,000 in plant and equipment. Lamont will provide any other financing needed.Based on Lamont's assumptions in Situation 3, prepare a pro forma income…
Noah’s ark video game expects sales to grow by 25% next year. Assume that it pays out 95% of its net income. Using the following statements and the percent of sales method, forecast the amount of net new financing needed.
You are a consultant who has been hired to evaluate a new product line for Markum Enterprises. The upfront investment required to launch the product line is $8 million. The product will generate free cash flow of $0.70 million the first year, and this free cash flow is expected to grow at a rate of 6% per year. Markum has an equity cost of capital of 10.8%, a debt cost of capital of 6.38%, and a tax rate of 25%. Markum maintains a debt-equity ratio of 0.50. a. What is the NPV of the new product line (including any tax shields from leverage)? b. How much debt will Markum initially take on as a result of launching this product line? c. How much of the product line's value is attributable to the present value of interest tax shields? Question content area bottom Part 1 a. What is the NPV of the new product line (including any tax shields from leverage)? The NPV of the new product line is million. (Round to two decimal places.) Part 2 b. How much debt will…
You are a consultant who has been hired to evaluate a new product line for Markum Enterprises. The upfront investment required to launch the product line is $8 million. The product will generate free cash flow of $0.70 million the first year, and this free cash flow is expected to grow at a rate of 6% per year. Markum has an equity cost of capital of 10.8%, a debt cost of capital of 6.38%, and a tax rate of 25%. Markum maintains a debt-equity ratio of 0.50. a. What is the NPV of the new product line (including any tax shields from leverage)? b. How much debt will Markum initially take on as a result of launching this product line? c. How much of the product line's value is attributable to the present value of interest tax shields? Question content area bottom Part 1 a. What is the NPV of the new product line (including any tax shields from leverage)? The NPV of the new product line is $enter your response here million. (Round to two decimal places.)
Laura is hoping that an investment of $30,200 will provide additional revenue to the store of $18,100 per year for 3 years. Her partner in crime, Kevin, is confident that a larger investment of $40,000 will be required to bring in a steady flow of $23,200 in new revenue per year for 3 years.Determine the discounted payback period for each investment (using before-tax cash flows). The company’s required rate of return is 9%. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answers to 2 decimal places e.g. 15.25.)Click here to view the factor table Laura Kevin Discounted payback period enter discounted payback period rounded to 2 decimal places years enter discounted payback period rounded to 2 decimal places years Whose investment appears to better use the company’s resources?select an option
Kevin Chang’s restaurant chain has a net income of $1 million, a dividend payout ratio of 50%, and assets of $8 million. If Kevin wishes his restaurant chain to grow at 10% next year, and his assets must grow with sales and net income, what is his external financing needed? You may calculate the pro-formas assuming the only liabilities that Kevin has are long term debt and retained earnings (equity). **Please explain each step Answer= Needs to fund $800,000 increase in assets. New ΔRE = ($1.1 million *1/2) = $550,000. So the EFN = 800,000-550,000 = $250,000.

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