Complete the following income statement for GRISWOLD, Inc

FIN 630 Chapter 4 Problem

Complete the following income statement for GRISWOLD, Inc.  The company is in the 33% tax bracket and they have $48,000 in assets being depreciated straight line over four years.

2016 INCOME STATEMENT                12/31/16    BALANCE SHEET

SALES            $79,000            ASSETS                DEBT & LIAB
COGS            $42,100        Current Assets      $12,000    Current Liab        $9,200
S&A Expenses        $ 8,000        Fixed Assets      $115,000    L-term Debt        $98,000
Depreciation        $______                                   Equity            $19,800
EBIT            $
Interest        $    3,000          Total Assets    $127,000    Debt & Liab        $127,000
EBT            $
Tax             $______
Net Income
=========

Next year, sales are expected to increase to $88,000.  Assets (both current and fixed) and COGS are proportional to sales.  Debt and equity are not.  A dividend payout ratio of 60% is employed.  The tax rate remains at 33% and depreciation will stay the same as calculated for 2016 above.

Complete the proforma income statement and balance sheet below.

PROFORMA INCOME STATEMENT            PROFORMA   BALANCE SHEET

SALES            $88,000            ASSETS                DEBT & LIAB
COGS            $            Current Assets      $         Current Liab        $
S&A Expenses        $ 8,000        Fixed Assets       $         L-term Debt        $
Depreciation        $______                                   Equity            $
EBIT            $
Interest        $    3,000          Total Assets     $        Debt & Liab        $
EBT            $
Tax             $______
Net Income
=========

Calculate the EXTERNAL FUNDING NEEDED.

Here’s the SOLUTION

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