A. Key input data for Vanguard Pharmaceuticals is listed below. This information includes the sales revenue from last year, the operating costs (excluding depreciation) as a % of sales, the total amount of net fixed assets at the end of last year, depreciation as a % of net fixed assets, total interest expense, the tax rate, and the % of net income that Vanguard paid out as dividends (the Dividend Payout Ratio). Given this information, construct Vanguard's income statement. Also calculate common dividends and the addition to retained earnings.

The input information required for the problem is outlined in the "Key Input Data" section below. Using this data and the balance sheet above, we constructed the income statement shown below.

Key Input Data for Vanguard Pharmaceuticals

2016

(Thousands of dollars)

Sales Revenue

$682,500

Expenses (excluding depreciation) as a percent of sales

76.5%

Net fixed assets

$100,500

Depr. as a % of net fixed assets

9.0%

Tax rate

36.0%

Interest expense

$12,825

Dividend Payout Ratio

22.5%

Vanguard Pharmaceuticals: Income Statement (Thousands of dollars)

2016

Sales

Operating costs excluding depreciation

EBITDA

Depreciation (Vanguard has no amortization charges)

EBIT

Interest expense

EBT

Taxes

Net income

Common dividends

Addition to retained earnings