(i)Estimate the EFN for 2021 using the Direct Method. [10 POINTS] (ii)The direct method EFN formula has...
Question:
(i)Estimate the EFN for 2021 using the "Direct Method".[10 POINTS]
(ii)The "direct method" EFN formula has three parts to it. Briefly explain what each part of the formula measures.
Income Statement ($ thousands)
2020
Sales
$95,023
Cost of goods sold
63,186
SG&A expense
8,241
Depreciation expense
6,106
EBIT
17,490
Interest expense
6,724
EBT
10,766
Taxes
5,092
Net income
5,674
Allocation of net income:
Dividends
$2,921
Addition to retained earnings
$2,753
Balance Sheet ($ thousands)
31-Dec-20
ASSETS
Current assets
Cash and marketable securities
$7,916
Accounts receivable
$22,854
Inventory
$30,991
Total current assets
$61,761
Net PPE
331,083
Total assets
$392,844
LIABILITIES AND EQUITY
Current liabilities
Accounts payable
$63,250
Short-term debt
$53,258
Total current liabilities
$116,508
Long-term debt
$58,757
Total liabilities
$175,265
Shareholders' equity
Common Stock & Paid-In Capital
$147,400
Retained earnings
$70,179
Total shareholders' equity
$217,579
Total liabilities and shareholders' equity
$392,844
Investment Analysis and Portfolio Management
ISBN: 978-1305262997
11th Edition
Authors: Frank K. Reilly, Keith C. Brown, Sanford J. Leeds