Financial Management: Theory & Practice
16th Edition
ISBN: 9781337909730
Author: Brigham
Publisher: Cengage
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Chapter 12, Problem 8P
Stevens Textile Corporation’s 2019 financial statements are shown here. Stevens grew rapidly in 2019 and financed the growth with notes payable and long-term bonds. Stevens expects sales to grow by 15% in the next year but will finance the growth with a line of credit, not notes payable or long-term bonds. Use the
- a. What is the projected value for earnings before interest and taxes?
- b. What is the projected value for pre-tax earnings?
- c. What is the projected net income?
- d. What is the projected addition to retained earnings?
- e. What is the projected value of total current assets?
- f. What is the projected value of total assets?
- g. What is the projected sum of accounts payable, accruals, and notes payable?
- h. What is the forecasted line of credit?
Balance Sheet as of December 31, 2019 (Thousands of Dollars)
Income Statement for December 31, 2019 (Thousands of Dollars)
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Students have asked these similar questions
Aneles Inc.’s Balance Sheet as of December 31, 2020 is as follows:
In 2020, the company reported sales of 3,000,000, Net Income of 60,000, and dividends of 10,000. Sales are projected to increase by 10% next year. Both Profit Margin and the Dividend Pay-Out Ratio will remain the same. Operations are at full capacity. Assume external fund will be raised through issuances of Long-Term Obligations or Bonds.
A. How much Long-term Debt will the company have to issue next year?
B. If the operations are not in full capacity, what will be AFN?
I need some explanation of a problem.
I ended up with the right answer but I'm not quite sure how I did.
Here is the question:
Garlington Technologies Inc.'s 2019 financial statements are shown here. Suppose that in 2020 sales increase to $4.4 million and that 2020 dividends will increase to $200,000. Forecasting the financial statements using the forecasted financial statement method. Assume the firm operated at full capacity in 2019. The long-term bonds have an interest rate of 12%. New financing will be with a line of credit. Assume it will be added at the end of the year. Cash does not earn any interest income.
Answer $98,000
Income statement for December 31, 2019
Sales
$4,000,000
Operating costs
3,200,000
EBIT
$800,000
Interest
120,000
Pre-tax earnings
$680,000
Taxes (25%)
170,000
Net income
$510,000
Dividends
$190,000
Balance Sheets as of December 31, 2019…
ECL Corporation recently reported the the following 2019 balance sheet and 2019 income statement (in pesos):
For the coming year, the company's CFO has assembled this information:
- The company is forecasting a 25% increase in sales
- It expects that its cost of goods sold, operating expenses, assets and current liabilities will increase at the same rate as sales
- Interest expense, long term debt and capital stock are expected to remain constant.
-Tax rate is expected to remain at 30%.
- No dividends will be declared.
Prepare the statement of cash flows for the year 2020 using the percent of sales method (estimation method)
ECL CORPORATION
BALANCE SHEET
DECEMBER 31, 2019
ASSETS
CURRENT ASSETS
CASH
114,690
ACCOUNTS RECEIVABLE
1,000
INVENTORY
1,000
TOTAL CURRENT ASSETS
116,690
FIXED ASSETS
NET FIXED ASSETS
40,000
TOTAL ASSETS…
Chapter 12 Solutions
Financial Management: Theory & Practice
Ch. 12 - Prob. 2QCh. 12 - Prob. 3QCh. 12 - Prob. 4QCh. 12 - What is meant by the term “self-supporting growth...Ch. 12 - Suppose a firm makes the following policy changes...Ch. 12 - Broussard Skateboard’s sales are expected to...Ch. 12 - Berman & Jaccor Corporation’s current sales and...Ch. 12 - Smiley Corporations current sales and partial...Ch. 12 - Maggie’s Muffins Bakery generated $5 million in...Ch. 12 - At year-end 2019, Wallace Landscapings total...
Ch. 12 - The Booth Company’s sales are forecasted to double...Ch. 12 - Upton Computers makes bulk purchases of small...Ch. 12 - Stevens Textile Corporations 2019 financial...Ch. 12 - Hatfield Medical Supplys stock price had been...Ch. 12 - Use the AFN equation to estimate Hatfield’s...Ch. 12 - Prob. 3MC
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