question archive Using the table below and the next worksheet forecast the 2017 income statement for Ethan Allen Use the percent of sales method and the following assumptions: (1) sales in FY 2017 will be $797
Using the table below and the next worksheet forecast the 2017 income statement for Ethan Allen Use the percent of sales method and the following assumptions: (1) sales in FY 2017 will be $797
Subject:FinancePrice:2.87 Bought10
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Using the table below and the next worksheet forecast the 2017 income statement for Ethan Allen Use the percent of sales method and the following assumptions: |
| (1) sales in FY 2017 will be $797.3359; | |||||||
| (2) the tax rate will be 35%; | |||||||
| (3) each item that changes with sales will be the five-year average percentage of sales; | |||||||
| (4) net fixed assets will increase to $300; | |||||||
| (5) the common dividend will be $0.75 per share. | |||||||
| (6) Use your judgment on all other items. |
| Ethan Allen Interiors Inc. | ||||||
| Income Statement (Industrial) | ||||||
| 2017* | 2016 | 2015 | 2014 | 2013 | 2012 | |
| Sales | 794.202 | 754.600 | 746.659 | 729.083 | 729.373 | |
| Cost of Goods Sold (COGS) incl. D&A | 351.966 | 343.437 | 340.163 | 330.734 | 339.085 | |
| Gross Income | 442.236 | 411.163 | 406.496 | 398.349 | 390.288 | |
| SG&A Expense | 353.057 | 345.229 | 336.860 | 337.912 | 340.676 | |
| EBIT (Operating Income) | 89.179 | 65.934 | 69.636 | 60.437 | 49.612 | |
| Interest Expense | 1.618 | 5.957 | 7.540 | 8.778 | 9.020 | |
| Other Income - Net | 0.395 | 1.206 | 0.306 | -1.485 | 0.562 | |
| Unusual Expense - Net | 0.000 | 4.500 | 0.000 | 0.000 | -0.085 | |
| Pretax Income | 87.956 | 56.683 | 62.402 | 50.174 | 41.239 | |
| Income Taxes | 31.319 | 19.541 | 19.471 | 17.696 | -8.455 | |
| Net Income | 56.637 | 37.142 | 42.931 | 32.478 | 49.694 | |
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Answer:
1) The EXCEL formulas that have been used to calculate Cost of Goods Sold and SG&A Expense for 2017 is given as below:
Cost of Goods Sold for 2017 = 1/5*(Cost of Goods Sold for 2016/Sales for 2016 + Cost of Goods Sold for 2015/Sales for 2015 + Cost of Goods Sold for 2014/Sales for 2014 + Cost of Goods Sold for 2013/Sales for 2013 + Cost of Goods Sold for 2012/Sales for 2012)*Sales for 2017 = 1/5*(351.966/794.202 + 343.437/754.600 + 340.163/746.659 + 330.734/729.083 + 339.085/729.373)*797.3359 = $362.374
SG&A Expense for 2017 = 1/5*(SG&A Expense for 2016/Sales for 2016 + SG&A Expense for 2015/Sales for 2015 + SG&A Expense for 2014/Sales for 2014 + SG&A Expense for 2013/Sales for 2013 + SG&A Expense for 2012/Sales for 2012)*Sales for 2017 = 1/5*(353.057/794.202 + 345.229/754.600 + 336.86/746.659 + 337.912/729.083 + 340.676/729.373)*797.3359 = $364.184
2) The value of interest expense, other income-net and unusual expense-net is taken to be the same as for the Year 2017. In other words, these items will not change with change in the value of sales.
PFA
