Question
In: Finance
#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%
Solutions
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
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