In: Finance
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PRO FORMA INCOME STATEMENT Austin Grocers recently reported the following 2016 income statement (in millions of dollars):
For the coming year, the company is forecasting a 30% increase in sales, and it expects that its year-end operating costs, including depreciation, will equal 65% of sales. Austin's tax rate, interest expense, and dividend payout ratio are all expected to remain constant.
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a: Net income = $167.1 million
c: Expected growth rate in dividend = (55.7-32)/32 = 74.06%
Workings
2016 income statement (in millions of dollars): | Ratio | 2017 | |
Sales | $700 | $910 | |
Operating costs including depreciation | 500 | $591.50 | |
EBIT | $200 | $318.50 | |
Interest | 40 | 40 | |
EBT | $160 | $278.50 | |
Taxes (40%) | 64 | 40% | $111.40 |
Net income | $96 | $167.10 | |
Dividends | $32 | 33.33% | $55.70 |
Addition to retained earnings | $64 | $111.40 |