Problem 1 - 30 points Use the following information to complete the income state

Question

Problem 1 - 30 points Use the following information to complete the income statement for Company A for the year ending December 31, 2013 (show work): Income Statement Information Revenue ############ Gross Margin 40.0% Selling General and Administrative (SG&A) 21.0% of revenue Research and Development (R&D) 12.0% of revenue Depreciation expense (D&A) $   5,000,000 Interest Expense $   5,000,000 Interest Income $   2,500,000 Tax Rate 35% Securities Information Weighted Average Shares (12/31/13)         10,000,000 A Warrants exercisable @ $2.00           2,200,000 B Warrants exercisable @ $3.00           2,500,000 Stock Price (12/31/13) $   4.00 Complete the following Income Statement Answers go in the yellow boxes Points Revenue ############ $   115,000,000 Cost of Goods Sold 1 Gross Profit 1 Operating Expenses SG&A 1 R&D 1 D&A Operating Expenses Total 1 Operating Income 5 Interest Expense, net 1 Pre Tax Income 1 Tax 1 Net Income 2 EPS Basic 5 EPS Diluted 10 Total Points 30 Use this table (below) to help with your calculations Diluted Share Calculations Basic A warrants B warrants Total Proceeds A warrants B warrants Total Proceeds Shares repurchased Diluted shares used to calculate Diluted EPS Total Score 60 Problem 1 - 30 points Use the following information to complete the income statement for Company A for the year ending December 31, 2013 (show work): Income Statement Information Revenue ############ Gross Margin 40.0% Selling General and Administrative (SG&A) 21.0% of revenue Research and Development (R&D) 12.0% of revenue Depreciation expense (D&A) $   5,000,000 Interest Expense $   5,000,000 Interest Income $   2,500,000 Tax Rate 35% Securities Information Weighted Average Shares (12/31/13)         10,000,000 A Warrants exercisable @ $2.00           2,200,000 B Warrants exercisable @ $3.00           2,500,000 Stock Price (12/31/13) $   4.00 Complete the following Income Statement Answers go in the yellow boxes Points Revenue ############ $   115,000,000 Cost of Goods Sold 1 Gross Profit 1 Operating Expenses SG&A 1 R&D 1 D&A Operating Expenses Total 1 Operating Income 5 Interest Expense, net 1 Pre Tax Income 1 Tax 1 Net Income 2 EPS Basic 5 EPS Diluted 10 Total Points 30 Use this table (below) to help with your calculations Diluted Share Calculations Basic A warrants B warrants Total Proceeds A warrants B warrants Total Proceeds Shares repurchased Diluted shares used to calculate Diluted EPS Total Score 60

Explanation / Answer

Revenue $115000000 Cost of goods sokd $69000000 Gross Profit $46000000 Operating Expenses SG & A $24150000 R & D $13800000 D & A $5000000 Operating Expenses Total $42950000 Operating Income $3050000 Interest Expense, Net of interest income $2500000 Pre Tax Income $550000 Tax @ 35% $192500 Net Income $357500 EPS Basic (357500/10000000) 0.03575 EPS Diluted (3607500/14700000) 0.2454 Calculation for Diluted EPS Earnings (357500+(5000000*0.65)) 3607500 Diluted shares uesd to calculate diluted EPS (10000000 + 2200000 + 2500000) 14700000

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