We can calculate EFN by preparing the pro forma statements using the percentage of sales approach. Note that sales are forecasted to be $4,250 ×1.10 = $4,675.
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SKANDIA MINING COMPANY Pro Forma Financial Statements |
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Income Statement |
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Sales |
$4,675.0 |
Forecast |
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Costs |
4,262.7 |
91.18% of sales |
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Taxable income |
$ 412.3 |
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Taxes (34%) |
140.2 |
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Net income |
$ 272.1 |
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Dividends |
$ 90.8 |
33.37% of net income |
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Addition to retained earnings |
181.3 |
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Balance Sheet |
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Assets |
Liabilities and Owners’ Equity |
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|
Current assets |
$ 990.0 |
21.18% |
Current liabilities |
$ 550 |
11.76% |
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|
Net fixed assets |
2,420.0 |
51.76% |
Long term debt |
1,800.0 |
n/a |
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|
Total assets |
$3,410.0 |
72.94% |
Owners’ equity |
981.3 |
n/a |
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|
Total liabilities and |
$3,331.3 |
n/a |
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|
EFN |
owners’ equity |
$ 78.7 |
n/a |
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