Answer:
pro forma Balance sheet
old increased
assets
non current assets 37800 43470
net PPE 37800 43470
Current assets 15400 17710
Inventory 9000 10350
Accounts receivable 3900 4485
cash 2500 2875
total assets 53200 61180
Equity & Liabilities
common stock 15000 15000
retained earnings 6800 13930
total 21800 28930
Liabilities
long term debt 24000 24000
Current liabilities 7400 7760
Accounts payable 2400 2760
notes payable 5000 5000
total 53200 60690
EFN = 61180 - 60690 = 490
PAYOUT RATIO = dividends / net income
additions to retained earnings = net income less dividends
Explanation
Retained earnings = old retained earnings plus additions to retained earnings = 6800 + 7130 =13930
Missing parts of the Question
Consider the following income statement for the Heir Jordan Corporation:
HEIR JORDAN CORPORATION
Income Statement
Sales $ 48,500
Costs 34,500
Taxable income $ 14,000
Taxes (35%) 4,900
Net income $ 9,100
Dividends $ 2,900
Addition to retained earnings 6,200
The balance sheet for the Heir Jordan Corporation follows.
HEIR JORDAN CORPORATION
Balance Sheet
Assets Liabilities and Owners’ Equity
Current assets Current liabilities
Cash $ 2,500 Accounts payable $ 2,400
Accounts receivable 3,900 Notes payable 5,000
Inventory 9,000 Total $ 7,400
Total $ 15,400 Long-term debt $ 24,000
Owners’ equity
Fixed assets Common stock and paid-in surplus $ 15,000
Net plant and equipment $ 37,800 Retained earnings 6,800
Total $ 21,800
Total assets $ 53,200 Total liabilities and owners’ equity $ 53,200
1.Prepare a pro forma balance sheet, assuming a 10 percent increase in sales, no new external debt or equity financing, and a constant payout ratio. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
2.Calculate the EFN. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
