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Projected Financial Statements and Ratios

Please see attached.
The Henley Corporation is a privately held company specializing in lawn care products and services. The most recent financial statements are shown below.

Income Statement for the Year Ending December 31 (Millions of Dollars)
Net Sales $800.0
Costs (except depreciation) $576.0
Depreciation $60.0
Total operating costs $636.0
Earning before int. & tax $164.0
Less interest $32.0
Earning before taxes $132.0
Taxes (40%) $52.8
Net income before pref. div. $79.2
Preferred div. $1.4
Net income avail. for com. div. $77.9
Common dividends $31.1
Addition to retained earnings $46.7

Number of shares (in millions) 10
Dividends per share $3.11

Balance Sheets for December 31 (Millions of Dollars)
Assets 2010 Liabilities and Equity 2010
Cash $8.0 Accounts Payable $16.0
Marketable Securities 20.0 Notes payable 40.0
Accounts receivable 80.0 Accruals 40.0
Inventories 160.0 Total current liabilities $96.0
Total current assets $268.0 Long-term bonds $300.0
Net plant and equipment 600.0 Preferred stock $15.0
Total Assets $868.0 "Common Stock
(Par plus PIC)" $257.0
Retained earnings 200.0
Common equity $457.0
Total liabilities and equity $868.0

Projected ratios and selected information for the current and projected years are shown below.


Solution Summary

The solution explains how to prepare projected financial statements and calculate the required ratios