Purchase Solution

Question about Forecasted addition to retained earnings

Not what you're looking for?

Ask Custom Question

Kenney Corporation reported the following income statement for the most recent year(numbers are in millions of dollars):

Sales $7,000
Total operating costs 3,000
EBIT $4,000
Interest 200
Earnings before tax (EBT) $3,800
Taxes (40%) 1,520
Net income available to
common shareholders $2,280

The company forecasts that its sales will increase by 10 percent in the next year and its operating costs will increase in proportion to sales. The company's interest expense is expected to remain at $200 million, and the tax rate will remain at 40 percent. The company plans to pay out 50 percent of its net income as dividends, the other 50 percent will be additions to retained earnings. What is the forecasted addition to retained earnings for the next year?

Purchase this Solution

Solution Summary

This provides the steps for calculations of forecasted addition to retained earnings

Solution Preview

Kenney Corporation reported the following income statement for the most recent year(numbers are in millions of dollars):

Sales $7,000
Total operating costs 3,000
EBIT $4,000
Interest ...

Purchase this Solution


Free BrainMass Quizzes
Organizational Leadership Quiz

This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.

Basics of corporate finance

These questions will test you on your knowledge of finance.

Accounting: Statement of Cash flows

This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.

Organizational Behavior (OB)

The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.

Understanding the Accounting Equation

These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.