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The most recent financial statements for Moose Tours, Inc., appear below. Sales for 2012 a

The most recent financial statements for Moose Tours, Inc., appear below. Sales for 2012 a

The most recent financial statements for Moose Tours, Inc., appear below. Sales for 2012 are projected to grow by 20 percent. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales.

 

MOOSE TOURS, INC.

2011 Income Statement

  Sales

$

749,000

  Costs

584,000

  Other expenses

20,000

  Earnings before interest and taxes

$

145,000

  Interest expense

16,000

  Taxable income

$

129,000

  Taxes (40%)

51,600

  Net income

$

77,400

 

  Dividends

$

18,060

  Addition to retained earnings

59,340

 

MOOSE TOURS, INC.

Balance Sheet as of December 31, 2011

Assets

Liabilities and Owners’ Equity

  Current assets

  Current liabilities

    Cash

$

20,840

    Accounts payable

$

55,000

    Accounts receivable

33,160

    Notes payable

14,200

    Inventory

70,120

      Total

$

69,200

      Total

$

124,120

  Long-term debt

$

132,000

  Fixed assets

  Owners’ equity

    Net plant and equipment

$

420,000

    Common stock and paid-in surplus

$

118,000

    Retained earnings

224,920

      Total

$

342,920

  Total assets

$

544,120

  Total liabilities and owners’ equity

$

544,120

What is the EFN if the firm wishes to keep its debt-equity ratio constant?

The most recent financial statements for Moose Tours, Inc., appear below. Sales for 2012 are projected to grow by 20 percent. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales.

 

MOOSE TOURS, INC.

2011 Income Statement

  Sales

 

 

 

$

749,000

 

  Costs

 

 

 

 

584,000

 

  Other expenses

 

 

 

 

20,000

 

 

 

 

 

 

 

 

  Earnings before interest and taxes

 

 

 

$

145,000

 

  Interest expense

 

 

 

 

16,000

 

 

 

 

 

 

 

 

  Taxable income

 

 

 

$

129,000

 

  Taxes (40%)

 

 

 

 

51,600

 

 

 

 

 

 

 

 

  Net income

 

 

 

$

77,400

 

 

 

 

 

 

 

 

  Dividends

$

18,060

 

 

 

 

  Addition to retained earnings

 

59,340

Abhinav 02-Dec-2019

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