The management of Coker Corp. is doing a quick forecast of 20times8, using the m
ID: 2460603 • Letter: T
Question
The management of Coker Corp. is doing a quick forecast of 20times8, using the modified percentage of sales method in preparation for a more detailed planning exercise later in the month. The estimate is to assume a 10% growth in sales. All other line items are to be assumed to grow at the same rate except for fixed assets which is projected to increase by 576,000 due to an expansion program already underway. Approximate financial statements for the current year, 20X8, and a planning worksheet are shown below. The firm pays 8% interest on all of its debt. Assume the tax rate is a flat 30%. There are no plans for dividends or the sale of additional stock next year. Make a forecast of Coker's complete income statement and balance sheet. Enter your answers in thousands. For example, an answer of $12 thousands should be entered as 12, not 12,000.Explanation / Answer
Coker Corp.
Current and projected income statements
20x8
20x9
Revenue
$645
709.5
COGS
271
298.1
Gross Margin
374
411.4
Expenses
120
132
EBIT
254
279.4
Interest (8%)
34
37.4
EBT
220
242
Inc Tax (30%)
66
72.6
Net Income
154
169.4
Coker Corp.
Current and Projected Income Statements
Assets
Liabilities
20X8
20X9
20X8
20X9
C/A
185
203.5
C/L
88
96.8
F/A
597
673
Debt
201
221.1
Equity
493
558.6
Total
782
876.5
Total
782
876.5
Coker Corp.
Current and projected income statements
20x8
20x9
Revenue
$645
709.5
COGS
271
298.1
Gross Margin
374
411.4
Expenses
120
132
EBIT
254
279.4
Interest (8%)
34
37.4
EBT
220
242
Inc Tax (30%)
66
72.6
Net Income
154
169.4
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