Required: What is the projected 2017 net income?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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PROBLEM 7-F BUDGETED NET INCOME
Reima Inc. 2016 income statement is presented below.
P3,500,00
Sales
Operating Costs
2,500,000
Earnings before interest and taxes P1,000,00
Interest expense
200,000
Earnings before taxes
P800,000
Income tax (40%)
320,000
Net Income
P480,000
Transcribed Image Text:PROBLEM 7-F BUDGETED NET INCOME Reima Inc. 2016 income statement is presented below. P3,500,00 Sales Operating Costs 2,500,000 Earnings before interest and taxes P1,000,00 Interest expense 200,000 Earnings before taxes P800,000 Income tax (40%) 320,000 Net Income P480,000
Dividends (40%)
Addition to retained earnings
P192,000
P288,000
For 2017, the firm is forecasting a 40% increase in sales and that its year end operating
costs will decline to 60% of sales. Tax rate, interest expense and dividend payout ratio are
expected to remain constant.
NIVER
Required:
What is the projected 2017 net income?
LOUIS
Transcribed Image Text:Dividends (40%) Addition to retained earnings P192,000 P288,000 For 2017, the firm is forecasting a 40% increase in sales and that its year end operating costs will decline to 60% of sales. Tax rate, interest expense and dividend payout ratio are expected to remain constant. NIVER Required: What is the projected 2017 net income? LOUIS
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