All categories

3 years ago

Pro forma income statement

Business

1 answer:

worty [1.4K]3 years ago

3 0

Answer:

Austin Grocers

1. Projected 2017 Net Income

= $102 million

2. Expected Growth Rate in Dividends

= 6.25% (2/32 x 100)

Explanation:

a) Income statement (in millions of dollars):

2016 2017

$'millions $'millions

Sales $700 $840

Operating costs

including depreciation 500 630

EBIT $200 $210

Interest 40 40

EBT $160 $170

Taxes (40%) 64 68

Net income $96 $102

Dividends $32 $34

Addition to

retained earnings $64 $68

b) Sales for 2017 = $840 million ($700 x 1.2)

c) Operating costs for 2017 = $630 million ($840 x75%)

d) Taxes for 2017 = $68million ($170 x 40%)

e) Dividend payout ratio = Dividend/Net Income = 33.33%

f) Growth Rate in Dividends = Dividend Increase/Previous year's dividend x 100 = 6.25% (2/32 x 100)

You might be interested in

What amount of cash would result at the end of one year, if $15,000 is invested today and the rate of return is 8%

Leona [35]

Answer:

Amount of cash at the end of one year is $16,200

Explanation:

Amount invested = $15,000

Rate of return = 8%

Amount at the end of one year = $15,000 + (0.08×$15,000) = $15,000 + $1,200 = $16,200

6 0

3 years ago

Valuing my degree. I went to LSUS for 2 years and did not work. It cost me $35,000 per year (tuition and living). When I graduat

Llana [10]

I have no idea I’ve tried everything

4 0

3 years ago

Ben and Jerry were shareholders of Water Ice Inc., an S corp. On Jan. 1, 1998, Ben owned 40 shares and Jerry owned 60 shares. Be

expeople1 [14]

Answer: $15,060

Explanation:

From the question, we are informed that Ben and Jerry were shareholders of Water Ice Inc., an S corp. On Jan. 1, 1998, Ben owned 40 shares and Jerry owned 60 shares.

We are further told that Ben sold his shares to Joe for $10,000 on March 31, 1998 and that the corp. reported a $50,000 loss at the end of 1998. The loss that will be allocated to Joe will be:

= $50,000 × 40% × 9/12

= $50,000 × 0.4 × 0.75

= $15,000

The closest figure we have close to that is $15,060 which is option B

7 0

3 years ago

Kart Inc., a publishing house, allows employees to log in at their preferred time and log off after completing eight hours. It d

Naddik [55]

Answer:

flexible time

Explanation:

Since their work time is not fixed, these employees have flexible work time. Often, this kind of working time is deemed to be a non-financial work benefit, as most people prefer to define their own work time. Sometimes, it is debated if this is really beneficial for the employees.

Nonetheless, they do have to respect their daily work time slot,

3 0

3 years ago

In its most recent annual report, Appalachian Beverages reported current assets of $54,000 and a current ratio of 1.80. Assume t

svetlana [45]

Answer:

Current Ratio - Transaction 1 = 1.6666 rounded off to 1.67

Current Ratio - Transaction 2 = 1.6388 rounded off to 1.64

Explanation:

The current ratio is a measure of liquidity which measures the amount of current assets a business has to pay off each $1 of current liability. It is calculated as follows,

Current Ratio = Current Assets / Current Liabilities

We know the initial current ratio and current assets. The initial current liabilities will be,

1.8 = 54000 / Current Liabilities

Current Liabilities = 54000 / 1.8

Current Liabilities = $30000

Transaction 1

The result of transaction 1 will be that the current assets will increase by $6000 as inventory increases and the current liabilities will also increase by $6000 as accounts payable are increasing. The new current ratio will be,

Current Ratio - Transaction 1 = (54000 + 6000) / (30000 + 6000)

Current Ratio - Transaction 1 = 1.6666 rounded off to 1.67

Transaction 2

The result of transaction 2 will be that the current assets will decrease by $1000 as payment for truck which is a fixed asset is made partly by cash and the current liabilities will not increase as the note signed for the remaining payment of the truck is due after 2 years thus it is a non current liability. The new current ratio will be,

Current Ratio - Transaction 2 = (54000 + 6000 -1000) / (30000 + 6000)

Current Ratio - Transaction 2 = 1.6388 rounded off to 1.64

5 0

2 years ago