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#4 A firm has the following (incomplete) income statement. All numbers are in dollars. The tax...

#4 A firm has the following (incomplete) income statement. All numbers are in dollars. The tax rate is 20%.

Cost of Goods Sold	10,000
Taxes	2,000
Administration	2,500
Interest	750
Depreciation	1,000

Determine:

Revenues
Net Income
EBIT
Plowback in dollars if the plowback ratio (the amount of money put back into the company) was 30%
Payout in dollars if the payout ratio (the amount of money paid to investors as dividends/disbursements) was 70%

Expert Solution

Revenue = $24,250

Net Income = $8000

EBIT = $10,750

Calcuation:

we have reverse computed the numbers from the available information

Profit before tax = tax amount/ tax rate

Net profit = Profit before tax - tax amount

EBIT = Profit before tax + Interest

Revenue = EBIT + Total expenses

Plowback amount = Plowback ratio* Net profit

Payout ratio = Payout ratio * Net profit

jeff jeffy answered 1 year ago

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