The most recent financial statements for Fleury Inc., follow. Sales for 2012 are projected to grow by 20 percent. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales.
Fleury,Inc.
2011 Income Statement
Sales $751,000
Costs $586,000
Other expenses $22,000
Earnings before interest and taxes $143,000
Interest paid $18,000
Taxable income $125,000
Taxes (40%) $50,000
Net Income $75,000
Dividends $30,000
Addition to retained earnings $45,000
Fleury,Inc
Balance Sheet of December 31,2011
Assets Liabilities and owners' Equity
Current Assets Current liabilities
Cash $21,040 Accounts payable $55,200
Accounts receivable $33,360 notes payable $14,400
Inventory $70,320 Total $69,600
Total $124,720 Long -term debt $134,000
Fixed Assets owners' Equity
Net plant and equipment $240,000 Common Stock and paid-in surplus $120,000
Retained Earnings $41,120
Total Assets $364,720 Total liabilities and owners' Equity $364,720
What is the EFN if the firm was operating at only 80 percent of capacity in 2011? Assume that fixed assets are sold so that the company has a 100 percent asset utilization.