Home / Questions / 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?
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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 |
||||
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