Sales 900,000
COGS 400,000
Gross Profit 500,000
S&A Expenses 60,000
Depreciation 20,000
EBIT 420,000
Interest 40,000
EBT 380,000
Taxes 50,000
EAT 330,000
Preferred stock dividends 80,000
Earnings available to Ordinary Shareholder 250,000
Ordinary shares outstanding 50,000
EPS 5.00
Problem 12 A Problem 12 B
Sales 1,000,000 Sales 1,050,900
COGS 780,000 78% COGS 777,666
Gross Profit 220,000 Gross Profit 273,234
S&A Expenses 120,000 12% S&A Expenses 147,126
Depreciation 11,000 Depreciation 11,000
EBIT 89,000 EBIT 115,108
Interest 8,000 Interest 15,800
EBT 81,000 EBT 99,308
Tax 24,300 30% Tax 29,792
EAT 56,700 EAT 69,516
EAT will increase
74%
14%
30%
ASSETS
Current Assets
Cash 14,000
Marketable Securities 24,000
Accounts receivable 54,000
Less: Allowance for bad debts 9,000 45,000
Inventory 70,000
Total Current Assets 153,000
Other Assets
Investments 20,000
Fixed Assets
Plant and Equipment 775,000
Less: Accumulated Depreciation 309,000
Net Plant & Equipment 466,000
Total Assets 639,000
LIABILITIES & SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable 35,000
Notes payable 34,000
Total Current Liabilities 69,000
Long Term Liabilities
Bonds payable 136,000
Total Liabilties 205,000
Shareholders' Equity
Preferred shares 59,000
Ordinary shares 100,000
Capital paid in excess of par (share premium) 88,000
Retained earnings 187,000
Total Shareholders' Equity 434,000
Total Liabities & Shareholders' Equity 639,000
