Garlington Technologies Inc.'s 2015 financial statements are shown below: Balance Sheet as of December 31, 2015 Income
Question:
Garlington Technologies Inc.'s 2015 financial statements are shown below:
Balance Sheet as of December 31, 2015
Income Statement for December 31, 2015
Sales ....................................$3,600,000
Operating costs ........................ 3,279,720
EBIT .................................... $ 320,280
Interest .................................. 18,280
Pre-tax earnings ....................... $ 302,000
Taxes (40%) ............................ 120,800
Net income ............................. $ 181,200
Dividends .............................. $ 108,000
Suppose that in 2016 sales increase by 10% over 2015 sales and that 2016 dividends will increase to $112,000. Forecast the financial statements using the forecasted financial statement method. Assume the firm operated at full capacity in 2015. Use an interest rate of 13%, and assume that any new debt will be added at the end of the year (so forecast the interest expense based on the debt balance at the beginning of the year). Cash does not earn any interest income. Assume that the all new debt will be in the form of a line of credit.
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
Step by Step Answer:
Intermediate Financial Management
ISBN: 978-1285850030
12th edition
Authors: Eugene F. Brigham, Phillip R. Daves