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

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