Cadbury plc is a global confectionery company. Cadbury is forecasting its financial statements for Year 9. Selected financial information for Years 7 and 8 is provided in the table. What is Retained Earnings for Year 9? Selected Financial Information
Cadbury plc (£ millions)
$$\begin{array} { | c | c | c | c | }
\hline & \text { Year 8 } & \begin{array} { c }
\text { Ratios } \
\text { (to Sales) }
\end{array} & \text { Forecast } \
\hline \text { Revenue } & £ 5,802 & & £ 6,962 \
\hline \text { COGS } & 3,300 & 0.568769 & \
\hline \text { SG\&A } & 1,490 & 0.256808 & \
\hline \text { Dep. Exp. } & 196 & & 312 \
\hline \text { EBIT } & 816 & & \
\hline \text { Int. Exp. } & 153 & & 77 \
\hline \text { EBT } & 663 & & \
\hline \begin{array} { c }
\text { Provision for Income } \
\text { taxes }
\end{array} & 30 & 0.045 ^ { * } & \
\hline \text { Net Income } & £ 633 & & \
\hline \text { Dividends } & & & £ 315 \
\hline \text { Retained Earnings } & £ 2,498 & & \
\hline \text { Shareholder's Equity } & £ 3,534 & & \
\hline
\end{array}$$ *Tax rate is a proportion of Earnings before Taxes.

Question

Cadbury plc is a global confectionery company. Cadbury is forecasting its financial statements for Year 9. Selected financial information for Years 7 and 8 is provided in the table. What is Retained Earnings for Year 9? Selected Financial Information
Cadbury plc (£ millions)
$$\begin{array} { | c | c | c | c | } 
\hline & \text { Year 8 } & \begin{array} { c } 
\text { Ratios } \
\text { (to Sales) }
\end{array} & \text { Forecast } \
\hline \text { Revenue } & £ 5,802 & & £ 6,962 \
\hline \text { COGS } & 3,300 & 0.568769 & \
\hline \text { SG\&A } & 1,490 & 0.256808 & \
\hline \text { Dep. Exp. } & 196 & & 312 \
\hline \text { EBIT } & 816 & & \
\hline \text { Int. Exp. } & 153 & & 77 \
\hline \text { EBT } & 663 & & \
\hline \begin{array} { c } 
\text { Provision for Income } \
\text { taxes }
\end{array} & 30 & 0.045 ^ { * } & \
\hline \text { Net Income } & £ 633 & & \
\hline \text { Dividends } & & & £ 315 \
\hline \text { Retained Earnings } & £ 2,498 & & \
\hline \text { Shareholder's Equity } & £ 3,534 & & \
\hline
\end{array}$$ *Tax rate is a proportion of Earnings before Taxes.

Quizplus · Accepted Answer

Retained Earnings for Year 9 = Retained Earnings for Year 8 + Net Income for Year 9 - Dividends for Year 9= £2,498 + £633 - £315= £2,917

Cadbury Plc Is a Global Confectionery Company *Tax Rate Is a Proportion of Earnings Before Taxes