In: Finance
The most recent financial statements for Crosby, Inc., follow. Sales for 2018 are projected to grow by 30 percent. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, and accounts payable increase spontaneously with sales. |
CROSBY, INC. 2017 Income Statement |
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Sales | $ | 752,000 | ||||
Costs | 587,000 | |||||
Other expenses | 23,000 | |||||
Earnings before interest and taxes | $ | 142,000 | ||||
Interest paid | 19,000 | |||||
Taxable income | $ | 123,000 | ||||
Taxes (24%) | 29,520 | |||||
Net income | $ | 93,480 | ||||
Dividends | $ | 28,044 | ||||
Addition to retained earnings | 65,436 | |||||
CROSBY, INC. Balance Sheet as of December 31, 2017 |
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Assets | Liabilities and Owners’ Equity | ||||||
Current assets | Current liabilities | ||||||
Cash | $ | 21,140 | Accounts payable | $ | 55,300 | ||
Accounts receivable | 44,080 | Notes payable | 14,500 | ||||
Inventory | 96,960 | Total | $ | 69,800 | |||
Total | $ | 162,180 | Long-term debt | $ | 135,000 | ||
Fixed assets | Owners’ equity | ||||||
Net plant and equipment | $ | 428,000 | Common stock and paid-in surplus | $ | 117,000 | ||
Retained earnings | 268,380 | ||||||
Total | $ | 385,380 | |||||
Total assets | $ | 590,180 | Total liabilities and owners’ equity | $ | 590,180 | ||
In 2017, the firm operated at 75 percent of capacity. Construct the pro forma income statement and balance sheet for the company. Assume that fixed assets are sold so that the company has a 100 percent asset utilization. (Do not round intermediate calculations.) |
What is the EFN? (Do not round intermediate calculations. A negative answer should be indicated by a minus sign.) |