Problem 1: (10 points) The following balance sheet and income statement pertain
ID: 2498811 • Letter: P
Question
Problem 1: (10 points)
The following balance sheet and income statement pertain to Goode Corp., using the following assumptions complete a forecasted 2016 income statement:
Assumptions for 2016:
Revenue growth rate
32%
COGS
64% of sales
Operating expenses
23% of sales
Interest expense
10% of beginning long-term debt
Tax rate
35%
Goode Corp. Consolidated Statement of Income
(Thousands except per share amounts)
2015
Net Revenues
$345,871
Cost of Revenue
(226,546)
SG&A
(83,009)
Operating Income
36,316
Interest Expense
(484)
Income Before Income Taxes
35,832
Income taxes
(12,541)
Net Income
$23,291
Goode Corp Consolidated Balance Sheet
(Thousands)
2015
Current Assets
Cash and Equivalents
7,905
Merchandise inventory
6,308
Accounts receivable
6,614
PPE (including intangibles), net
39,458
Total Assets
60,285
Liabilities and Stockholders' Equity
Accounts payable
9,643
Long-term debt
13,500
Shareholders' Equity
Common stock and APIC
28,613
Retained earnings
8,529
Total Liabilities and Shareholders' Eq.
60,285
Forecasted income statement:
Goode Corp. Consolidated Statements of Income
(Thousands except per share amounts)
2016
2015
Assumptions for 2016:
Revenue growth rate
32%
COGS
64% of sales
Operating expenses
23% of sales
Interest expense
10% of beginning long-term debt
Tax rate
35%
Explanation / Answer
Goode Corp. Consolidated Statement of Income for 2016 ($ in Thousands ) Net Revenues 456550 ($345871 + 32% of $345871) Cost of Revenue -292192 (64% of $456550) SG&A -105006 (23% of $456550) Operating Income 59351 Interest Expense -1350 (10% of $13500) Income Before Income Taxes 58001 Income taxes -20301 (35% of $ 58001) Net Income 37701