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Pro forma retained earnings - ex. #2 The bottom line on the pro forma P&L for...

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Finance

Pro forma retained earnings - ex. #2

The bottom line on the pro forma P&L for the fiscal year thathas just begun is $500,000. The top line is $3.5 million.

The current balance in retained earnings is $2,100,000.

A dividend payout ratio of 40% is anticipated.

a) [review] What is the net profit margin?

b) [review] Explain the answer toa) above.

c) Forecast retained earnings at the end of thefiscal year that has just begun.

d) Which pro forma financial statement will showthe forecasted retained earnings figure calculated inc) above?

Answer & Explanation Solved by verified expert
4.4 Ratings (724 Votes)
a Bottom Line 500000 and Top Line 35 million Net Profit Margin Bottom Line Top Line x 100 500000 3500000 x 100 142857 1429 b Bottom Line is the last line in the    See Answer
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Transcribed Image Text

Pro forma retained earnings - ex. #2The bottom line on the pro forma P&L for the fiscal year thathas just begun is $500,000. The top line is $3.5 million.The current balance in retained earnings is $2,100,000.A dividend payout ratio of 40% is anticipated.a) [review] What is the net profit margin?b) [review] Explain the answer toa) above.c) Forecast retained earnings at the end of thefiscal year that has just begun.d) Which pro forma financial statement will showthe forecasted retained earnings figure calculated inc) above?

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