S&S Air
3. Depreciation percentage=$1,640,200/$15,411,620 = 10.64%
New Fixed Assets=$15,411,620 + $30,000,000 = $45,411,620
$45,411,620*.1064 = $4,831,796 new depreciation
Pro forma Income Statement
Sales ($36,599,300*1.12) $40,991,216
Cost of Goods Sold ($26,669,496*1.12) 29,869,836
Other Expenses ($4,641,000*1.12) 5,197,920
Depreciation 4,831,796
EBIT 1,091,664
Interest 573,200
Taxable Income 518,464
Taxes (40%) 207,386
Net Income $311,078
Dividends ($311,0786*0.30) $93,323
Add to Retained Earnings $217,755
Pro forma Balance Sheet
Assets Liabilities and Stockholder’s Equity
Current Assets Current Liabilities Cash ($396,900*1.12) $444,528 Accounts Payable ($844,550*1.12) $945,896 Accounts Receivable ($637,560*1.12) 714,067 Notes Payable 1,928,500 Inventory ($933,400*1.12) 1,045,408 Total Current Liabilities 2,874,396 Total Current Assets $2,204,003 Long-term Debt $5,050,000
Fixed Assets Net Plant and Stockholder’s Equity Equipment $45,411,620 Common Stock $322,500 Retained Earnings 9,451,685 Total Equity $9,774,185
Total Assets $47,615,623 Total Liabilities and Stockholder’s Equity $17,698,581
EFN=$47,615,623-$17,698,581 = $29,917,042
Since the fixed assets have increased at a faster percentage than sales, capacity utilization for next year will decrease because the addition of the new line would expand capacity much more than would normally be
New Fixed Assets=$15,411,620 + $30,000,000 = $45,411,620
$45,411,620*.1064 = $4,831,796 new depreciation
Pro forma Income Statement
Sales ($36,599,300*1.12) $40,991,216
Cost of Goods Sold ($26,669,496*1.12) 29,869,836
Other Expenses ($4,641,000*1.12) 5,197,920
Depreciation 4,831,796
EBIT 1,091,664
Interest 573,200
Taxable Income 518,464
Taxes (40%) 207,386
Net Income $311,078
Dividends ($311,0786*0.30) $93,323
Add to Retained Earnings $217,755
Pro forma Balance Sheet
Assets Liabilities and Stockholder’s Equity
Current Assets Current Liabilities Cash ($396,900*1.12) $444,528 Accounts Payable ($844,550*1.12) $945,896 Accounts Receivable ($637,560*1.12) 714,067 Notes Payable 1,928,500 Inventory ($933,400*1.12) 1,045,408 Total Current Liabilities 2,874,396 Total Current Assets $2,204,003 Long-term Debt $5,050,000
Fixed Assets Net Plant and Stockholder’s Equity Equipment $45,411,620 Common Stock $322,500 Retained Earnings 9,451,685 Total Equity $9,774,185
Total Assets $47,615,623 Total Liabilities and Stockholder’s Equity $17,698,581
EFN=$47,615,623-$17,698,581 = $29,917,042
Since the fixed assets have increased at a faster percentage than sales, capacity utilization for next year will decrease because the addition of the new line would expand capacity much more than would normally be