17-5. Jim\'s expects sales to grow by 10.0% next year. Assume that Jim\'s pays o

Question

17-5. Jim's expects sales to grow by 10.0% next year. Assume that Jim's pays out 85% of its net income. Use the data table below and the percent of sales method to forecast:

a. Stockholders' equity

a. Stockholders' equity
The additions to stockholders' equity will be $ ____. (Round to the nearest dollar.)
The new stockholders' equity will be $ _____. (Round to the nearest dollar.)

Data Table

Income Statement Balance Sheet

Sales 200,000 Assets
Costs Except Depreciation -100,000 Cash/Equivalents 15000
EBITDA 100,000 Accounts Recv 2000
Depreciation -6,000 Inventories 4000
EBIT $94,000 Total Current Assets 21,000
Interest Expense (net) -400 Property,plant & Equipment 10,000
Pretax Income 93,600 Total Assets 31,000
Income Tax -32,760 Liabilities & Equity
Net Income 60,840 Accts PayPayable1500
Debt 4000
Total Liabilities 5500
Stockholders' Equity 25,500
Total Liabilities & Equity 31,000

Explanation / Answer

Assumption: There is no need of additional capital and assets for producing additional 10%. Present company capacity is enough to produce 110%. The additions to stockholders' equity will be $10,101. The new stockholders' equity will be $35,601 Working: 100% 110% Sales 200000 220000 Cost 100000 110000 EBITDA 100000 110000 Depreciation 6000 6000 EBIT 94000 104000 Interest Expense 400 400 Pre tax income 93600 103600 Income Tax 35% 32760 36260 Net Income 60840 67340 Pay's out 85% 57239 Transfor to Equity 10101 Total Share Holders Equity 25500 Current Share Holders Equity 10101 Total Equity 35601 Assumption: Additional capital and assets required for producing additional 10%. Present company capacity is not enough to produce 110%. The additions to stockholders' equity will be $10,039. The new stockholders' equity will be $35,539. Working: 100% 110% Sales 200000 220000 Cost 100000 110000 EBITDA 100000 110000 Depreciation 6000 6600 EBIT 94000 103400 Interest Expense 400 440 Pre tax income 93600 102960 Income Tax 35% 32760 36036 Net Income 60840 66924 Pay's out 85% 56885.4 Transfor to Equity 10038.6 Total Share Holders Equity 25500 Current Share Holders Equity 10039 Total Equity 35539 Assumption: Additional capital and assets required for producing additional 10%. Present company capacity is not enough to produce 110%. The additions to stockholders' equity will be $10,039. The new stockholders' equity will be $35,539. Working: 100% 110% Sales 200000 220000 Cost 100000 110000 EBITDA 100000 110000 Depreciation 6000 6600 EBIT 94000 103400 Interest Expense 400 440 Pre tax income 93600 102960 Income Tax 35% 32760 36036 Net Income 60840 66924 Pay's out 85% 56885.4 Transfor to Equity 10038.6 Total Share Holders Equity 25500 Current Share Holders Equity 10039 Total Equity 35539 Thank you.... 100% 110% Sales 200000 220000 Cost 100000 110000 EBITDA 100000 110000 Depreciation 6000 6000 EBIT 94000 104000 Interest Expense 400 400 Pre tax income 93600 103600 Income Tax 35% 32760 36260 Net Income 60840 67340 Pay's out 85% 57239 Transfor to Equity 10101

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

---

---

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