(Using common-size financial statements) The S&H Construction Company expects to have total sales next year totaling $14,600,000. In addition, the firm pays taxes at 35 percent and will owe $315,000 in interest expense. Based on last year's operations the firm'smanagement predicts that its cost of goods sold will be 59 percent of sales and operating expenses will total 26 percent. What is your estimate of the firm's net income (after taxes) for the coming year?Complete the pro-forma income statement below: (Round to the nearest dollar.)Pro-Forma Income StatementSalesCost of goods soldGross profitOperating expensesNet operating incomeInterest expenseEarnings before taxesTaxesNet income$

Step 1: Given Value for Calculation Next Year Sales = s = $14,600,000Tax Rate = tr = 35%Interest…

Answered: (Using common-size financial…

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter7: Corporate Valuation And Stock Valuation

Section: Chapter Questions

Problem 1P: Ogier Incorporated currently has $800 million in sales, which are projected to grow by 10% in Year 1...

See similar textbooks

Similar questions

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 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?
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
(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 $ $ $ $ $
(Using common-size financial statements) The S&H Construction Company expects to have total sales next year totaling $15,400,000. 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 28 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 income Interest expense Earnings before taxes Таxes Net income %24 %24
(Using common-size financial statements) The S&H Construction Company expects to have total sales next year totaling $14,600,000. In addition, the firm pays taxes at 35 percent and will owe $294,000 in interest expense. Based on last year's operations the firm's management predicts that its cost of goods sold will be 63 percent of sales and operating expenses will total 27 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 income Interest expense Earnings before taxes Taxes Net income $ $ $ $ $ C
(Using common-size financial statements) The S&H Construction Company expects to have total sales next year totaling $15,300,000. In addition, the firm pays taxes at 35 percent and will owe $283,000 in interest expense. Based on last year's operations the firm's management predicts that its cost of goods sold will be 55 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? 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 income Interest expense Earnings before taxes Taxes Net income $ $ $ $ $
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
The Optical Scam Company has forecast a sales growth rate of 20 percent for next year. Current assets, fixed assets, and short-term debt are proportional to sales. The current financial statements are shown here: Sales Costs Taxable income Taxes Net income Dividends Addition to retained earnings Current assets Fixed assets Total assets Assets Current assets Fixed assets INCOME STATEMENT Total assets $ 7,230,000 18,390,000 $ 1,149,982 1,724,853 Assets b-2. External financing needed c. Sustainable growth rate $ 25,620,000 a. Calculate the external funds needed for next year using the equation from the chapter. Note: Do not round intermediate calculations. External financing needed b-1. Prepare the firm's pro forma balance sheet for next year. Note: Do not round intermediate calculations. BALANCE SHEET Short-term debt Long-tern debt Common stock Accumulated retained earnings $ 30,500,000 26,077,300 $ 4,422,700 1,547,945 $ 2,874,755 Liabilities and Equity Total equity Total liabilities and…
(Financial forecasting—percent of sales) Next year’s sales for Cumberland Mfg. are expected to be $22 million. Current sales are $18 million, based on current assets of $5 million and fixed assets of $5 million. The firm’s net profit margin is 5 percent after taxes. Cumberland estimates that current assets will rise in direct proportion to the increase in sales but that its fixed assets will increase by only $150,000. Currently, Cumberland has $2 million in accounts payable (which vary directly with sales), $1 million in long-term debt (due in 10 years), and common equity (including $4 million in retained earnings) totaling $6.5 million. Cumberland plans to pay $750,000 in common stock dividends next year. Required: What are Cumberland’s total financing needs (that is, total assets) for the coming year? Given the firm’s projections and dividend payment plans, what are its discretionary financing needs? Based on your projections, and assuming that the $150,000 expansion in fixed assets…
Finlay Corporation had sales this year of $3,270 million, and sales are expected to grow by 20 percent next year. Next year the company expects cost of goods sold to be 60 percent of sales, selling expenses to be $40 million per month, depreciation to be $10 million per month, and interest expense to be $24 million per month. Taxes are computed at 21 percent. What is Finlay's expected net income next year?
The Optical scam company has forecast a sales growth of 20 percent for next year. The current financial statements are shown below: What is pro forma balance sheet for next year? Sales $ 31,600,000 Costs 26,675,500 Taxable income $ 4,924,500 Taxes 1,723,575 Net income $ 3,200,925 Dividends $ 1,280,370 Addition to retained earnings 1,920,555 Balance Sheet Assets Liabilities and Owners' Equity Current assets $ 7,320,000 Accounts payable $ 5,688,000 Long-term debt 6,636,000 Fixed assets 20,172,000 Common stock $ 1,594,000 Accumulated retained earnings 13,574,000 Total equity $ 15,168,000 Total assets $ 27,492,000 Total liabilities and equity

SEE MORE QUESTIONS

Recommended textbooks for you

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

Intermediate Financial Management (MindTap Course…

Finance

ISBN:

9781337395083

Author:

Eugene F. Brigham, Phillip R. Daves

Publisher:

Cengage Learning

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

Intermediate Financial Management (MindTap Course…

Finance

ISBN:

9781337395083

Author:

Eugene F. Brigham, Phillip R. Daves

Publisher:

Cengage Learning

SEE MORE TEXTBOOKS