Please don;t dump a table without explaning or showing the calculation. Thank yo
ID: 2735079 • Letter: P
Question
Please don;t dump a table without explaning or showing the calculation. Thank you,
You have the balance sheet and income statement for Amazing Entertainment
Annual Assets ($M)
Y1
Annual Liabilities ($M)
Y1
Cash & Equivalents
67
Notes Payable
13
Accounts Receivable
100
Accounts Payable
115
Inventories
248
Accruals
102
Other Current Assets
41
Other Current Liability
34
Total Current Assets
456
Total CL
264
Prop, Plant & Equip
528
Long Term Debt
137
- Accumulated DEP
145
Total Liabilities
401
Net Prop & Equip
383
Common Equity
11
Intangibles & Other
31
Retained Earnings
458
Total Fixed Assets
414
Shareholder Equity
469
TOTAL ASSETS
870
TOTAL LIAB & Equity
870
INCOME STATEMENT ($M)
Y1
Net Sales
1930
Cost of Goods Sold
1190
SG&A Expenses
450
Depreciation
30
Earnings Before Interest & Tax (EBIT)
260
Interest Expense
10
Earnings Before Tax
250
Taxes (40%)
100
Net Income
150
Dividends
50
Assume sales grow by 30% next year. Cost of goods sold grows with sales, but selling, general and administrative (SG&A) expenses grow by 35%. Assume depreciation expense and gross property, plant and equipment both grow 25%. The tax rate is 40%. The firm plans to pay $50M in dividends next year. All spontaneous assets and liabilities grow with sales except accruals, other current assets and other current liabilities, which grow 25%. Spontaneous assets and liabilities are current asset and liability accounts that follow sales (i.e. cash, receivables and payables). Intangibles, notes payable and common stock will not change. Holding long-term debt constant and interest expense constant, estimate the additional funds needed.
Annual Assets ($M)
Y1
Annual Liabilities ($M)
Y1
Cash & Equivalents
67
Notes Payable
13
Accounts Receivable
100
Accounts Payable
115
Inventories
248
Accruals
102
Other Current Assets
41
Other Current Liability
34
Total Current Assets
456
Total CL
264
Prop, Plant & Equip
528
Long Term Debt
137
- Accumulated DEP
145
Total Liabilities
401
Net Prop & Equip
383
Common Equity
11
Intangibles & Other
31
Retained Earnings
458
Total Fixed Assets
414
Shareholder Equity
469
TOTAL ASSETS
870
TOTAL LIAB & Equity
870
Explanation / Answer
Solution.
INCOME STATEMENT ($M) Y1 Change New Amount Net Sales 1930 1.3 2,509.00 Cost of Goods Sold 1190 1.3 1,547.00 SG&A Expenses 450 1.35 607.50 Depreciation 30 1.25 37.50 Earnings Before Interest & Tax (EBIT) 260 317 Interest Expense 10 (10.00) Earnings Before Tax 250 307.00 Taxes (40%) 100 (122.80) Net Income 150 184.20 Dividends 50 50