MHE Reader current ratio Topic:El Teatro Cam. : Homework Saved The most recent f

Question

MHE Reader current ratio Topic:El Teatro Cam. : Homework Saved The most recent financial statements for Fleury Inc., follow. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs other expenses, current assets, fixed assets and accounts payable increase spontaneously with sales. FLEURY, INC. 2011 Income Statement Sales Costs Other expenses $743,000 578,000 15.200 Earnings before interest $149,800 11,200 $138,600 and taxes Interest paid Taxable income Taxes (35%) 48,510 Net income $90,090 Dividends Addition to retained earnings $27027 63,063 FLEURY, INC Balance Sheet as of December 31, 2011 Liabilities and Owners Current liabilities Accounts payable Current assets $ 20,240 $ 54,400 Cash

Explanation / Answer

FLEURY INC PRO FORMA INCOME STATEMENT 15% Sales Growth 20% Sales growth 25% Sales growth Sales Sales*(100+sales growth) 854450 891600 928750 Costs 578000/743000*New Sales 664700 693600 722500 Other Expenses 15200/743000 17480 18240 19000 EBIT 172270 179760 187250 Interest $11,200 $11,200 $11,200 Taxable Income $161,070 $168,560 $176,050 Tax @ 35% $56,374.50 $58,996.00 $61,617.50 Net Income $104,695.50 $109,564.00 $114,432.50 Dividends 30% $31,408.65 $32,869.20 $34,329.75 Add to RE $73,286.85 $76,694.80 $80,102.75 FLEURY INC Balance Sheet as of December 31, 2011 Assets 15% Sales Growth 20% Sales growth 25% Sales growth Liabilities and Owners Equity 15% Sales Growth 20% Sales growth 25% Sales growth Current Assets Current Liabilities (20240/743000) 0.027241 Cash 23276 24288 25300 Accounts Payable 62560 65280 68000 0.073217 (54400/743000) 32560/743000 0.043822 Accounts Receivable 37444 39072 40700 Notes Payable $13,600 $13,600 $13,600 69520/743000 0.093567 Inventory 79948 83424 86900 Total 76160 78880 81600 Total 140668 146784 152900 Long Term Debt $126,000 $126,000 $126,000 Fixed Assets 330400/743000 0.444684 Net Plant And Equipment 379960 396480 413000 Owners Equity Common Stock and paid in capital $112,000 $112,000 $112,000 Retained earnings $220,006.85 $223,414.80 $226,822.75 Total Assets 520628.00 543264.00 565900.00 $534,166.85 $540,294.80 $546,422.75 15% 20% 25% EFN ($13,538.85) $2,969.20 $19,477.25 (520628-534166.85) (543264-540294.80) (565900-546422.75)

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