Question

Jim's Espresso expects sales to grow by 9.7% next year. Assume that Jim's pays out 83.9% of its net income. Use the following statements and the percent of sales method to forecast:

A. Stockholders' equity

B. Accounts Payable

Income Statement

Sales . $199,870

Costs Except Depreciation (99,230)

EBITDA . $100,640

Depreciation EBIT . $94,680

Interest Expense (net) (510)

Pre-tax Income $94,170

Income Tax (32,960)

Net Income $61,210

Balance Sheet

Assets

Cash and Equivalents $14,980

Accounts Receivable 1,900

Inventories 4,090

Total Current Assets $20,970

Property, Plant, and Equipment 9,960

Total Assets $30,930

Liabilities and Equity

Account Payable $1,400

Debt 3,910

Total Liabilities $5,310

Stockholders' Equity 25,620

Total Liabilities and Equity $30,930

Answer 1

	Last Year	Basis for projections	Next Year
INCOME STATEMENT
Sales	$   1,99,870	+9.70%	$      2,19,257
Costs except depreciation	$     -99,230	49.6473% of sales	$     -1,08,855
EBITDA	$   1,00,640		$      1,10,402
Depreciation	$        5,960	2.9819% of sales	$            6,538
EBIT	$      94,680		$    1,03,864
Interest expense (net)	$         -510		$          -510
Pre-tax income	$      94,170		$    1,03,354
Taxes at 35%	$      32,960		$       36,174
Net income	$      61,210		$       67,180
Dividends (83.9%)	$      51,355		$       56,364
Addition to retained earnings	$        9,855		$       10,816
BALANCE SHEET
Cash & cash equivalents	$      14,980	7.4949% of sales	$          16,433
Accounts Receivable	$        1,900	0.9506% of sales	$            2,084
Inventories	$        4,090	2.0463% of sales	$            4,487
Total current assets	$      20,970	$                               23,004.09	$          23,004
Property, plant and equipment	$        9,960	4.9832% of sales	$          10,926
Total assets	$      30,930		$          33,930
Accounts payable	$        1,400	0.7005% of sales	$            1,536
Total current liabilities	$        1,400		$            1,536
Debt	$        3,910		$            3,910
Total debt	$        5,310		$            5,310
Stockholders' equity	$      25,620	+10816	$          36,436
Millions	$      30,930		$          41,746
New financing required [-ve sign indicates surplus cash]			$           -7,816