(Answered) Chapter 18, Question 1- The following is the financial statement of Executive Fruit Company for the year ended December 2014. - Tutorials Prime
Chapter 18, Question 1- The following is the financial statement of Executive Fruit Company for the year ended December 2014.
Chapter 18, Question 1- The following is the financial statement of Executive Fruit Company for the year ended December 2014.  INCOME STATEMENT, 2014 (Figures in $ Thousands)   Revenue $ 3,500    Cost of goods sold  3,150      EBIT $ 350    Interest  70      Earnings before taxes $ 280    State and federal tax  112      Net income $ 168    Dividends  112      Additions to retained earnings $ 56     BALANCE SHEET (Year-End, 2014) (Figures in $ Thousands)   Assets         Net working capital $ 350       Fixed assets  1,400         Total assets $ 1,750      Liabilities and shareholders' equity         Long-term debt $ 700       Shareholders' equity  1,050         Total liabilities and shareholders' equity $ 1,750     The following are the first stage and second stage pro forma financial statements of Executive Fruit Company for the year ended December 2015.  First stage pro forma statements:  PRO FORMA INCOME STATEMENT, 2015 (Figures in $ Thousands)   Revenue $ 3,850    Cost of goods sold  3,465      EBIT $ 385    Interest  70      Earnings before taxes $ 315    State and federal tax  126      Net income $ 189    Dividends  126      Additions to retained earnings $ 63     PRO FORMA BALANCE SHEET (Year-End, 2015) (Figures in $ Thousands)   Assets         Net working capital $ 385       Fixed assets  1,540         Total assets $ 1,925      Liabilities and shareholders' equity         Long-term debt $ 700       Shareholders' equity  1,113         Total liabilities and shareholders' equity $ 1,813            Required external financing $ 112     Second stage pro forma balance sheet:  PRO FORMA BALANCE SHEET (Year-End, 2015) (Figures in $ Thousands)   Assets         Net working capital $ 385       Fixed assets  1,540         Total assets $ 1,925      Liabilities and shareholders' equity         Long-term debt $ 812       Shareholders' equity  1,113         Total liabilities and shareholders' equity $ 1,925     How would Executive Fruit’s financial model change if the dividend payout ratio were cut to 1/3? Use the revised model to generate a new financial plan for 2015 assuming that debt is the balancing item. What would be the required external financing? (Do not round intermediate calculations.)   Dividends fall by $ . Therefore, the requirement for external financing falls from $ to $ . On the other hand, shareholders' equity will be increased by $ .   The right-hand side of the balance sheet becomes (Do not round intermediate calculations. Enter your answers in thousands.):      Long-term debt $    Shareholders' equity     Total $    Chapter 18, Question 3- Executive Fruit’s financial manager believes that sales in 2015 could rise by as much as 20% or by as little as 5%. Assets and costs change in proportion to sales, debt remains constant, and no new equity financing occurs.   a. Recalculate the first-stage pro forma financial statements under these two growth assumptions and calculate the required external financing (All figures are in thousands). (Enter your answers in thousands.)   Base Case      20% Growth       5% Growth INCOME STATEMENT         Revenue $ 12,000  $   $    Cost of goods sold  10,800          EBIT $ 1,200  $   $    Interest  240          Earnings before taxes $ 960  $   $    State and federal tax  384          Net income $ 576  $   $    Dividends  384          Retained earnings $ 192  $   $            BALANCE SHEET         Assets            Net working capital $ 1,200  $   $       Fixed assets  4,800             Total assets $ 6,000  $   $       Liabilities and shareholders' equity            Long-term debt $ 2,400  $   $       Shareholders' equity  3,600             Total liabilities and shareholders' equity $ 6,000  $   $       Required external financing    $   $   b. Assume any required external funds will be raised by issuing long-term debt and that any surplus funds will be used to retire such debt. Prepare the completed (second-stage) pro forma balance sheet. (Enter your answers in thousands.)  BALANCE SHEET  Base Case 20% Growth    5% Growth     Assets            Net working capital $ 1,200  $   $       Fixed assets  4,800             Total assets $ 6,000  $   $       Liabilities and shareholders' equity            Long-term debt $ 2,400  $   $       Shareholders' equity  3,600             Total liabilities and shareholders' equity $ 6,000  $   $   Please see attachment with two questions.  Chapter 18, Question 1- The following is the financial statement of Executive Fruit Company for the year ended
December 2014.
INCOME STATEMENT, 2014
(Figures in $ Thousands)
Revenue
$
3,500
Cost of
goods sold
3,150
EBIT
$
350
Interest
70
Earnings
before
taxes
$
280
State and
federal tax
112
Net
income
$
168
Dividend
s
112
Additions
to retained
earnings
$
56
BALANCE SHEET (Year-End, 2014)
(Figures in $ Thousands)
Assets
Net working capital
$
350
Fixed assets
1,400
Total assets
$
1,750
Liabilities and
shareholders' equity
Long-term debt
$
700
Shareholders' equity
1,050
Total liabilities and
shareholders' equity
$
1,750
The following are the first stage and second stage pro forma financial statements of Executive Fruit Company for
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Jan 02, 2020
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