Refer to the financial statement data of ABEX Chemicals, Inc., reproduced in Case 105. Required: a. Prepare a forecast of

Question:

Refer to the financial statement data of ABEX Chemicals, Inc., reproduced in Case 10–5.

Exhibit I TOTAL U.S. POLYETHYLENE CAPACITY, PRODUCTION, AND PRICES Compound Projected Projected Annual Year 5 Year 6 Yea

ABEX CHEMICALS, INC. Selected Key Statistics Projected Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Polyethylene operation


Required:

a. Prepare a forecast of ABEX’s total operating income for Year 10. (Hint: Refer to forecast data for volume, price, and cost.)

b. Identify additional information necessary to prepare a forecast of earnings per share (EPS) for Year 10, and identify five primary sources where you can obtain this information (you should identify primary sources and not necessarily external sources for the information needed).

c. Forecast and explain incremental changes in ABEX’s earnings per share based on each of the following two independent scenarios for the petrochemical division only.

(1) Price of polyethylene in Year 10 is 8% higher than shown in the selected key statistics.

(2) Volume of production and sales of polyethylene is 8% higher than shown in the selected key statistics.

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Related Book For  answer-question

Financial Statement Analysis

ISBN: 978-0073379432

10th edition

Authors: K. R. Subramanyam, John J. Wild

Question Details
Chapter # 12
Section: Problems
Problem: 2
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Question Posted: June 18, 2019 05:54:09