6-4. PRO FORMA INCOME STATEMENT Austin Grocers recently reported the following 2015 income statement (in millions of dollars): $700 $500 $200 40 Sales Operating costs including depreciation ЕBIT Interest EBT Тахes (40%) Net income $160 64 Dividends Addition to retained earnings $ 96 $32 $ 64 For the coming year, the company is forecasting a 25% increase in sales, and it expects that its year- end operating costs, including depreciation, will equal 70% of sales. Austin's tax rate, interest expense, and dividend payout ratio are all expected to remain constant. a. What is Austin's projected 2016 net income? b. What is the expected growth rate in Austin's dividends?

Last year company A introduced a new product and sold 25,900 units at $97.00 per unit.  The product variable expense $67.00 per unit with a fixed price expense of $835,500 per year.   a. What is the product's net income or loss last year? b. What is the product break-even point in unit sales and dollar sales? c. Assume the company has conducted a market study that estimates it can increase sales by 5,000 units for each $2.00 reduction in its selling price.  If the company would only consider increments of $2.00(e.g. $68,$66, etc)  What is the maximum annual profit that can be earned on this product?  What sales volume and selling price per unit generate the maximum profit? d. What would be the break-even point in unit sales and dollar sales using the selling price that was determined in the required letter c above?  Thank you,

Company B’s income statement for this year is shown below. Assume that the company’s sales will increase by 10% but fixed expenses remain the same next year. By what percentage will net operating income increase? Sales $100 Variable expenses 30 Contribution Margin 70 Fixed expenses 35 Net operating income $35 a)20% b)10% c)40% d)30%

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The following tables summarizes the 2019 income statement and end-year balance sheet of Drake’s Bowling Alleys. Drake’s financial manager forecasts a 10% increase in sales and costs in 2020. The ratio of sales to average assets is expected to remain at 0.40. Interest is forecasted at 5% of debt at the start of the year.   INCOME STATEMENT, 2019 (Figures in $ thousands) Sales $ 1,120   (40% of average assets)a Costs   840   (75% of sales) Interest   26   (5% of debt at start of year)b Pretax profit $ 254     Tax   101   (40% of pretax profit) Net income $ 152       a Assets at the end of 2018 were $2,700,000. b Debt at the end of 2018 was $530,000.   BALANCE SHEET, YEAR-END (Figures in $ thousands) Assets   $ 2,900       Debt $ 530                 Equity   2,370   Total   $ 2,900         $ 2,900       a. What is the implied level of assets at the end of 2020? (Do not round your intermediate calculations. Enter your answer in thousands.) b. If the…

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