Need help with finance 3100 question. Beer Brothers Inc. forecasts that its year
ID: 2729031 • Letter: N
Question
Need help with finance 3100 question.
Beer Brothers Inc. forecasts that its year-end assets will be $3,000, its sales will be $3,500, its operating costs will be $2,650, its interest charges will be $100, and its tax rate will be 40%. Its total current liabilities are $250 consisting of $60 of accruals and $190 of notes payable. Its long-term debt is $950. Beer's capital structure consists of only debt and common equity. What is Beer's forecasted profit margin? 13.85% 13.51% 12.86% 13.18% 14.20%Explanation / Answer
Profit margin = Net Income / Net sales
Net Income = Sales - operating cost -interest charges -income tax
Net Income =( 3500-2650-100) -40% of (3500-2650-100) = $450
Net sales = $3500
Profit MArgin = 450/3500 = 12.86%