Question

The most recent financial statements for Crosby Inc., follow. Sales for 2018 are projected to grow...

The most recent financial statements for Crosby Inc., follow. Sales for 2018 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 and accounts payable increase spontaneously with sales.

CROSBY, INC.
2017 Income Statement
  Sales $763,000
  Costs 598,000
  Other expenses 34,000
  Earnings before interest and taxes $131,000
  Interest paid 30,000
  Taxable income $101,000
  Taxes (25%) 25,250
  Net income $75,750
Dividends $23,483
Addition to retained earnings 52,267
CROSBY, INC.
Balance Sheet as of December 31, 2017
Assets Liabilities and Owners’ Equity
  Current assets   Current liabilities
    Cash $ 22,240     Accounts payable $ 56,400
    Accounts receivable 45,180     Notes payable 15,600
    Inventory 107,960       Total $ 72,000
      Total $ 175,380   Long-term debt $ 146,000
  Fixed assets   Owners’ equity
    Net plant and equipment $ 439,000     Common stock and paid-in surplus $ 122,500
    Accumulated retained earnings 273,880
Total $ 396,380
Total assets $ 614,380 Total liabilities and owners’ equity $ 614,380

In 2017, the firm operated at 80 percent of capacity. Construct the pro forma income statement and balance sheet for the company. Assume that the company cannot sell fixed assets. This implies that asset utilization may remain less than 100 percent next year as well. (Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.)



What is the EFN? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g. 32. A negative answer should be indicated by a minus sign.)

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