Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Financial Statements for Royal Corporation
Actual 2016 and Pro Forma 2017 ($ millions)
Income Statement
Net sales
Cost of goods sold
Other expenses
Depreciation expense
EBIT
Interest expense
Earnings before tax
Tax
Net income
Dividends paid
90
Add. to retained earnings $ 269
O $4,563
O $4,663
$4.453
2016
2017
$ 47,616 $52,378 Cash & securities
40,718
44,790 Accounts receivable
5,171
5,688 Inventories
1,000
1,100
727
800
215
215
512
585
154
176
$ 359
$ 409
$5,663
Balance Sheet
102
Net fixed assets
Total assets
Bank loan (short-term)
Accounts payable
Long-term debt
Total liabilities
2016
$951
2017
$1,046
5,666
6,233
4,236 4,660
4,048
14,901
$392
In the above financial statements, Royal Corporation has prepared (incomplete) pro forma financial
statements for 2017 based on actual financial statements for 2016. Royal Corp. used the percent-
of-sales method, assuming a sales growth rate of 10% for 2017. If capital expenditures are planned
to be $1,615 in 2017, then what would be the appropriate projection for net fixed assets in 2017?
7,419
2,148
9,959
Shareholders' equity
4,942
Total liabilities & equity $ 14,901
$431
8,161
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Transcribed Image Text:Financial Statements for Royal Corporation Actual 2016 and Pro Forma 2017 ($ millions) Income Statement Net sales Cost of goods sold Other expenses Depreciation expense EBIT Interest expense Earnings before tax Tax Net income Dividends paid 90 Add. to retained earnings $ 269 O $4,563 O $4,663 $4.453 2016 2017 $ 47,616 $52,378 Cash & securities 40,718 44,790 Accounts receivable 5,171 5,688 Inventories 1,000 1,100 727 800 215 215 512 585 154 176 $ 359 $ 409 $5,663 Balance Sheet 102 Net fixed assets Total assets Bank loan (short-term) Accounts payable Long-term debt Total liabilities 2016 $951 2017 $1,046 5,666 6,233 4,236 4,660 4,048 14,901 $392 In the above financial statements, Royal Corporation has prepared (incomplete) pro forma financial statements for 2017 based on actual financial statements for 2016. Royal Corp. used the percent- of-sales method, assuming a sales growth rate of 10% for 2017. If capital expenditures are planned to be $1,615 in 2017, then what would be the appropriate projection for net fixed assets in 2017? 7,419 2,148 9,959 Shareholders' equity 4,942 Total liabilities & equity $ 14,901 $431 8,161
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