Use the Following Information and the Percent-Of-Sales Method to Answer

question 13

Multiple Choice

Use the following information and the percent-of-sales method to answer the following question(s) .
Below is the 2014 year-end balance sheet for Banner,Inc.Sales for 2014 were $1,600,000 and are expected to be $2,000,000 during 2015.In addition,we know that Banner plans to pay $90,000 in 2015 dividends and expects projected net income of 4% of sales.(For consistency with the Answer selections provided,round your forecast percentages to two decimals. )
Banner,Inc.Balance Sheet
December 31,2014
Assets
Current assets $890,000
Net fixed assets 1,000,000
Total $1,890,000
Liabilities and Owners' Equity
Accounts payable $160,000
Accrued expenses 100,000
Notes payable 700,000
Long-term debt 300,000
Total liabilities 1,260,000
Common stock (plus paid-in capital) 360,000
Retained earnings 270,000
Common equity 630,000
Total 1,890,000
-Banner's projected discretionary financing needed for 2015 is

• A)$420,000.
• B)$440,000.
• C)$360,000.
• D)$370,000.

Apply techniques to re-express data to make it more interpretable or to better reveal its structure.

Understand and analyze the distribution of data including skewness and gaps.

Compare and contrast distributions using graphical representations.

Identify outliers and understand their impact on data interpretation.

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Definitions:

Profit Margin

A financial metric used to evaluate a company's profitability, calculated as net income divided by revenue.

COGS/Sales

COGS/Sales is a financial ratio that measures the cost of goods sold against the total sales revenue, often used to assess the efficiency of production.

Taxes/Sales

A ratio that shows the proportion of taxes paid relative to total sales revenue, often used in financial analysis.

Highly Levered Firm

A company that has more debt than equity, indicating it uses significant leverage in its capital structure.