Pro Forma Income Statements Assignment | Homework For You

The most recent financial statements for Scott, Inc., appear below. Interest expense will remain constant; the tax rate and the dividend payout rate also will remain constant. Costs, other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales. Assume the firm is operating at full capacity and the debt-equity ratio is held constant.

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2019 Income Statement
  Sales $ 756,000
  Costs 612,000
  Other expenses 25,500
  Earnings before interest and taxes $ 118,500
  Interest expense 11,200
  Taxable income $ 107,300
  Taxes (23%) 24,679
  Net income $ 82,621
Dividends $ 41,340
Addition to retained earnings 41,281
Balance Sheet as of December 31, 2019
Assets Liabilities and Owners’ Equity
  Current assets   Current liabilities
    Cash $ 24,540     Accounts payable $ 58,600
    Accounts receivable 33,890     Notes payable 15,500
    Inventory 70,790       Total $ 74,100
      Total $ 129,220   Long-term debt $ 104,000
  Owners’ equity
  Fixed assets     Common stock and paid-in surplus $ 99,000
    Net plant and equipment $ 213,000     Retained earnings 65,120
      Total $ 164,120
  Total assets $ 342,220   Total liabilities and owners’ equity $ 342,220
Complete the pro forma income statements below. (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.)
Pro – Forma Income Statement
10% Sales Growth 15% Sales Growth 40% Sales Growth
Other Expenses
Interest Expense
Taxable Income
Taxes (23%)
Net Income
Add to RE

Homework For You

Calculate the EFN for 10, 15 and 40 percent growth rates. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to the nearest whole dollar amount.)
10% 15% 40%

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