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See attached. This is an exercise in constructing a P&L from info provided. It involves determining various line-items based on A/R DSO, Inventory MOH, A/P Days, etc. info.
NOTE: The NIBT amount (Net Income Before Tax) can be determined by dividing NIAT by (1-tax rate % as a decimal). For example, if NIAT is $250,000 and the tax rate is 38%, the NIBT would be:
NIBT = NIAT/(1 – 0.38) = $250,000/0.62 = $403,226.
The Expenses can be calculated as the difference between GP & NIBT.
Try this & let me know if you have any questions.
Ken
Construct a 2013 P&L for a company with the following data and calculate eps: (NOTE: eps is NIAT “available to common shareholders” divided ny share quantity.
Retained Earnings 12/31/12 $1,250,000
Retained earnings 12/31/13 1,600,000
A/R 12/31/13 1,250,000 (60 days DSO)
Inventory 12/31/13 1,500,000 (4 months-on-hand)
A/P 12/31/13 562,500 (45 days)
Net Profit Margin 10%
Tax Rate 30%
Preferred Dividend 2013 $100,000
Common Dividend $300,000
Common Stock 325,000 shares
Complete all line items:
Sales
COGS
Gross Profit (GP)
GP%
Expenses
NIBT
Tax
NIAT
EPS
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