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Prepare a proforma statement of comprehensive income

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Reference no: EM133068526

Question 1: The most recent financial statements for Suncrest Inc. are shown here:

Statement of Comprehensive Income                   Statement of Financial Position

Sales                       $26,400           Assets      $65,000        Debt    521,400

Costs                        17,300                                             Equity 37,600

Taxable income          $9,100             Total        $65,000        Total   $65,000 

Taxes (40%)               3,640

Net income               $5,460

Assets and costs are proportional to sales. Debt and equity are not A dividend of 52.300 was paid, and suncrest wishes to maintain a constant payout ratio. Next year's sales are projected to be $30.360.
What is the external financing needed?

LO1: How to compute the external financing needed to fund a firm's growth.

Question 2:

Consider the following statement of comprehensive income for the Dartmoor Corporation:

DARTMOOR CORPORAT1CN
Statement of Comprehensive Income

Sales                                                                                 $47,000

Costs                                                                                 31,300

Taxable income                                                                    $15,700

Taxes (35%)                                                                          5,495

Net income                                                                          $10,205

Dividends                                                               $2,500

Addition to retained earnings                                       7,705

A 20% growth rate in sales is projected.

Prepare a proforma statement of comprehensive income assuming costs vary with sales and the dividend payout ratio is constant.

What is the projected addition to retained earnings?

LO2: How to apply the percentage of sales method.

Question 3: A firm wishes to maintain an internal growth rate of 6.5% and a dividend payout ratio of 25%. The current profit margin is 6% and the firm uses no external financing sources.
What must total asset turnover be?

LO3: The factors determining the growth of the firm and how to compute the sustainable and internal growth rates.

Reference no: EM133068526

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