@ newconnect ework current ratio formula... Topic: El Teatro Cam Chapter 4: Home

Question

@ newconnect ework current ratio formula... Topic: El Teatro Cam Chapter 4: Homework Saved Consider the following income statement for the Heir Jordan Corporation: HEIR JORDAN CORPORATION Income Statement 6 points Sales Costs $46,800 36,200 Skipped Taxable income Taxes (35%) $10.600 3,710 eBook Print ReferencesNet $ 6,890 Dividends Addition to retained $3,400 3.490 earnings The projected sales growth rate is 10 percent. Prepare a pro forma income statement assuming costs vary with sales and the dividend payout ratio is constant. (Input all amounts as positive values. Do not round intermediate calculations.) IR JORDAN CORPORATIO o Forma Income Statem Prev 1of 51H Next >

Explanation / Answer

Given

Particulars

Amount

Sales

$46,800

Costs

$36,200

Taxable Income

$10,600

Taxes (35%)

$3,710

Net Income

$6,890

Dividends

$3,400

Addition to retained earnings

$3,490

Proforma:

Payout ratio = 3400/6890 = 49.3469%

Particulars

Amount

Sales = 46800 x (1+10%) =

$51,480

Costs = 36200 x (1+10%) =

$39,820

Taxable Income

$11,660

Taxes (35%)

$4,081

Net Income

$7,579

Dividends (49.3469%)

$3,740

Addition to retained earnings

$3,839

Addition to retained earnings = $3,839

Particulars

Amount

Sales

$46,800

Costs

$36,200

Taxable Income

$10,600

Taxes (35%)

$3,710

Net Income

$6,890

Dividends

$3,400

Addition to retained earnings

$3,490

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