In: Finance
Consider the following income statement for the Heir Jordan Corporation: |
HEIR JORDAN CORPORATION Income Statement |
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Sales | $ | 42,000 | |||||
Costs | 32,800 | ||||||
Taxable income | $ | 9,200 | |||||
Taxes (24%) | 2,208 | ||||||
Net income | $ | 6,992 | |||||
Dividends | $ | 2,503 | |||||
Addition to retained earnings | 4,489 | ||||||
The balance sheet for the Heir Jordan Corporation follows. |
HEIR JORDAN CORPORATION Balance Sheet |
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Assets | Liabilities and Owners’ Equity | ||||||
Current assets | Current liabilities | ||||||
Cash | $ | 3,150 | Accounts payable | $ | 2,400 | ||
Accounts receivable | 4,500 | Notes payable | 4,300 | ||||
Inventory | 6,400 | Total | $ | 6,700 | |||
Total | $ | 14,050 | Long-term debt | $ | 25,000 | ||
Owners’ equity | |||||||
Fixed assets | Common stock and paid-in surplus | $ | 13,000 | ||||
Net plant and equipment | $ | 35,600 | Retained earnings | 4,950 | |||
Total | $ | 17,950 | |||||
Total assets | $ | 49,650 | Total liabilities and owners’ equity | $ | 49,650 | ||
Prepare a pro forma balance sheet, assuming an increase in sales of 13 percent, no new external debt or equity financing, and a constant payout ratio. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) |
Calculate the EFN. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |