Question

The Eagle Feather Fabric Company expects to complete the current year with the financial results given...

The Eagle Feather Fabric Company expects to complete the current year with the financial results given below.

Forecast next year using a modified percentage of sales method assuming no dividends are paid and no new stock is sold along with the following:

  1. A 17% growth in sales and a 40% growth in net fixed assets.
  2. A 15% growth in sales with a 10% growth in expenses and a 20% growth in net fixed assets. (Note that negative debt means the business will generate more cash than is currently owed.)

Enter your answers in thousands. For example, an answer of $12 thousands should be entered as 12, not 12,000. Round your answer to the nearest thousand. Enter all amounts as a positive number.

INCOME STATEMENT ($000)
Current Year Next Year
        a.         b.
Revenue $36,100 $    $   
COGS 14,440      
Gross Margin $21,660 $    $   
Expenses 12,635      
EBIT $9,025 $    $   
Interest (11%) 625      
EBT $8,400 $    $   
Tax (42%) 3,528      
Net Income $4,872 $    $   
BALANCE SHEET ($000)
Assets
Cash $1,000 $    $   
Accounts receivable 5,000      
Inventory 2,888      
Current assets $8,888 $    $   
Net fixed assets 7,250      
Total Assets $16,138 $    $   
Liabilities & equity
Accounts payable $1,550 $    $   
Accruals 530      
Current liabilities $2,080 $    $   
Debt 5,598      
Equity 8,460      
Total L&E $16,138 $    $   

Homework Answers

Answer #1

Refer the following computations :

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