Balance Sheet, 2016 Assets Cash and Equivalents Accounts Receivable Income State

Question

Balance Sheet, 2016 Assets Cash and Equivalents Accounts Receivable Income Statement, 2016 Sales Costs except Depr. -3,500,000 EBITDA Depreciation EBIT Interest Expense (net)100,500 Pretax Income Income Tax Net Income 5,000,000 1,096,000 960,000 90,000 2,146,000 2,190,000 4336,000 1,500,000 -10,900 1,489,100 Inventories Total Current Assets Property Plant&Equipment; Total Assets 1,388,600 486,010 902,590 Liabilities &Equity; Accounts Payable Debt Total Liabilities Stockholders' Equity Total Liabilities and Equity 900,000 950,000 1,850,000 2,486,000 4,336,000 Sales in 2017 are expected to grow at a rate of 9% with respect to the values of 2016. Assume the company pays out 55% of its net income. 1. Use the percent sales method to forecast the value of next year s stockholder s equity for frm x. QUESTION 2 2. Use the percent sales to estimabe the firm s net new financing for fim X

Explanation / Answer

1. Value of Stockholders' Equity Next Year

Sales in 2016 = $5000000

Sales in 2017 = Sales in 2016 * ( 1 + Growth Rate) / 100

Sales in 2017 = $5000000 * ( 1 + 9%) / 100

Sales in 2017 = $5450000

EBITDA % in 2016 = EBITDA / Sales = $1500000 / $5000000 = 30%

EBITDA in 2017 = Sales * EBITDA % in 2016 = $5450000 * 30% = $1635000

EBIT in 2017 = EBITDA in 2017 - Depreciation = $1635000 - $10900 = $1624100

Pre Tax Income = EBIT - Interest Expense = $1624100 - $100500 = $1523600

Net Income = Pre Tax Income * (1 - Tax)

Net Income in 2017 = $1523600 * (1 - 0.35) = $990340

Stock Holders' Equity Value in 2017 = Value in 2016 + Net Income

Stock Holders' Equity Value in 2017 = $2486000 + $990340 * 0.45

Stock Holders' Equity Value in 2017 = $2486000 + $445653

Stock Holders' Equity Value in 2017 = $2931653

2. New Finance Required = - Increase in Retained Earnings - Liabilities in 2017 + Assets in 2017

New Finance Required = -$445653 - $900000 * 109% + $2146000 * 109%

New Finance Required = -$445653 - $981000 + $2339140

New Finance Required = $912487

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.