Jim's Espresso expects sales to grow by 9.7% next year. Assume that Jim's pays out 83.9%...

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Finance

Jim's Espresso expects sales to grow by 9.7% next year. Assumethat Jim's pays out 83.9% of its net income. Use the followingstatements 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 & Explanation Solved by verified expert

4.1 Ratings (665 Votes)

	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

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Transcribed Image Text

Jim's Espresso expects sales to grow by 9.7% next year. Assumethat Jim's pays out 83.9% of its net income. Use the followingstatements and the percent of sales method to forecast:A. Stockholders' equityB. Accounts PayableIncome StatementSales . $199,870Costs Except Depreciation (99,230)EBITDA . $100,640Depreciation EBIT . $94,680Interest Expense (net) (510)Pre-tax Income $94,170Income Tax (32,960)Net Income $61,210Balance SheetAssetsCash and Equivalents $14,980Accounts Receivable 1,900Inventories 4,090Total Current Assets $20,970Property, Plant, and Equipment 9,960Total Assets $30,930Liabilities and EquityAccount Payable $1,400Debt 3,910Total Liabilities $5,310Stockholders' Equity 25,620Total Liabilities and Equity $30,930