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gladu [14]
1 year ago
11

You are considering an investment into company xyz and need to determine the company's value and the appropriate investment amou

nt. You have been provided with historical financial statements for the past three years in order to build a forecast model. Key assumptions to use include: future sales revenue is assumed to increase at 2. 5% annually. Gross margin for 2021e is assumed to be equal to the average gross margin % for 2019 and 2020, but will decrease by 2. 5% (i. E. 250 bps) each year thereafter sg&a expense is assumed to be a percentage of revenue for the forecast period. That percentage is equal to the 2018-2020 average depreciation expense is assumed to be a percentage of revenue for the forecast period. That percentage is equal to the 2018-2020 average the tax rate for the forecast period is assumed to be equal to the effective tax rate for 2018 capital expenditures for any given year in the forecast period is assumed to be 3x the prior year's depreciation expense. For example, 2021 capital expenditures is equal to 3x 2020 depreciation expense. No new debt or equity is assumed to be issued.
Business
1 answer:
ZanzabumX [31]1 year ago
8 0

Option A is correct. The gross earnings that has been calculated for this 12 months is given as 17545.

The required details for gross earnings in given paragraph

How to resolve for the gross earnings

22050 × 97.5%(100-2.5%) = 21498.75

= 21498.75 × 0.975 = 20961.28

= 20961.28 x 0.975 = 20437.24

= 20437.24 x  0.975  = 19926.31

= 19926.31 ×  0.975  = 19428.15

= 19428.15 x  0.975  = 18942.forty five

= 18942.forty five x  0.975  = 18468.80

= 18468.89 ×  0.975  = 18017

= 18007 × 0.975  = $17545

Hence we are able to see on the give up of the answer that the price of the gross earnings in 2028 = $17545. Gross earnings is the earnings a business enterprise makes after deducting the charges related to making and promoting its products, or the charges related to offering its services. Gross earnings will seem on a business enterprise's earnings assertion and may be calculated with the aid of using subtracting the fee of products sold (COGS) from revenue (income).

These figures may be determined on a business enterprise's earnings assertion. Gross earnings will also be called income earnings or gross earnings.

To know about  Gross earnings click here

brainly.com/question/21637154

#SPJ4

Complete question

You are considering an investment into Company XYZ and need to determine the company's value and the appropriate investment amount. You have been provided with historical financial statements for the past three years in order to build a forecast model. Key assumptions to use include:

Future sales revenue is assumed to increase at 2.5% annually.

Gross margin for 2021E is assumed to be equal to the average gross margin % for 2019 and 2020, but will decrease by 2.5% (i.e. 250 bps) each year thereafter

SG&A expense is assumed to be a percentage of revenue for the forecast period. That percentage is equal to the 2018-2020 average

Depreciation expense is assumed to be a percentage of revenue for the forecast period. That percentage is equal to the 2018-2020 average

The tax rate for the forecast period is assumed to be equal to the effective tax rate for 2018

Capital expenditures for any given year in the forecast period is assumed to be 3x the prior year's depreciation expense. For example, 2021 capital expenditures is equal to 3x 2020 depreciation expense.

No new debt or equity is assumed to be issued

Download CFI_-_FMVA_Practice_Exam_Case_Study_A.xlsx and answer the following 12 questions.

1 What is Gross Profit in 2028E using the assumptions listed above and on the Control Panel?

$17,545

$30,704

$27,780

$40,938

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Answer:

a. <u>GDP using product approach</u>

There are no intermediate goods inputs. Corn producer grows 30 million bushels of corn and each bushel of corn worth is $5.

GDP = 30 million * $5

GDP = $150 million

<u>GDP using expenditure approach</u>

i) Consumers buy 20 million bushels of corn

Consumption = 20 million * 5

Consumption (C) = $100 million

ii) Corn producer adds 5 million bushels to inventory

Investment = 5 million * $5

Investment (I) = $25 million

iii) Government buys 5 million bushels of corn  

Government spending = 5 million * $5

Government spending (G) = $25 million

GDP = C + I + G

GDP = $100 + $25 + $25  

GDP = $150 million

<u>GDP using income approach</u>

Profit income = $150 million - $60 million - $20 million

Profit income = $70 million

Government income = Taxes paid by the corn producer = $20 million

GDP = $60 million + $70 million + $20 million

GDP = $150 million

b. Private disposable income = GDP + Net factor payments + Government transfers + Interest on the government debt - Total taxes

Private disposable income = $150 million + 0 + $5 million + $10 million - $30 million

Private disposable income = $135 million

 

Private savings = Private disposable income - Consumption

Private savings = $135 million - $100 million

Private savings = $35 million

Government savings = Government tax income - Transfer payments - Interest on the government debt - Government spending

Government savings = $30 million - $5 million - $10 million - $5 million

Government savings = $10 million

National savings = Private savings + Government savings

National savings = $35 million + $10 million

National savings = $45 million

Government budget surplus = Government savings = $10 million

Government deficit = (-) $10 million

8 0
3 years ago
Stormer Company reports the following amounts on its statement of cash flow: Net cash provided by operating activities was $30,5
DIA [1.3K]

Answer:

$38,500

Explanation:

Sheridan's ending cash balance can be calculated as;

= Beginning cash balance + cash provided by operating activities + cash provided by financing activities - cash used by investing activities

= $5,500 + $30,500 + $13,500 - $11,000

= $38,500

Therefore, the ending cash balance is $38,500

6 0
2 years ago
When identifying the sources of ineffective performance, managers often: a. ignore external conditions an employee faces. b. ign
AlekseyPX

Answer:

Correct option is D

When identifying the sources of ineffective performance, managers often <u>attribute poor performance to a lack of ability of individual performers.</u>

Explanation:

The principle explanation for this low capacity of a solitary individual is on the grounds that the activity doled out to them doesn't coordinate with their capacity.

6 0
3 years ago
On February 1, a seller paid $1,140 in annual property tax for the current calendar year. He sold the house with the closing set
Vera_Pavlovna [14]

<u>Given:</u>

Annual property tax = $1,140

Number of days = 91

<u>To find:</u>

Seller's credit for property tax

<u>Solution:</u>

The following is the calculation of the seller credit for property taxes,

\text{Seller credit for property taxes} = \text{Total tax}\times \frac{\text{Number of days}}{360}

On plugging-in the values we get,

\text{Seller credit for property taxes} = \$1,140\times\frac{91}{360}

\Rightarrow \$1,140\times0.25278 = \$288

Therefore, the seller's credit for property taxes is $288.

6 0
3 years ago
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lys-0071 [83]

Answer:

1,100 units; 1,050 units

Explanation:

Calculation to determine the equivalent units for direct materials and conversion​ costs, respectively, for​ March

DIRECT MATERIALS CONVERSION COSTS L

Completed and transferred out

1,000 units 1,000 units

(300 units+800 units - 100 units)

Add Work in process, ending

100 units 50 units

(50% Complete*100 units=50 units)

Total equivalent units

1,100 units 1,050 units

Therefore the equivalent units for direct materials and conversion​ costs, respectively, for​ March will be 1,100 units; 1,050 units

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3 years ago
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