Question
In: Finance
The 2017 financial statements for Growth Industries are presented below. INCOME STATEMENT, 2017 Sales $ 310,000...
The 2017 financial statements for Growth Industries are presented below.
INCOME STATEMENT, 2017
Sales $ 310,000
Costs 205,000
EBIT $ 105,000
Interest expense 21,000
Taxable income $ 84,000
Taxes (at 35%) 29,400
Net income $ 54,600
Dividends $ 21,840
Addition to retained earnings 32,760
BALANCE SHEET, YEAR-END, 2017
Assets
Current assets
cash 7,000
accounts receivable 12,000
inventories 31,000
total current assets 50,000
net plant and equipments 250,000
total assets 300,000
liabilities
current liabilities
accounts payable 14,000
total current liabilities 14,000
long term debt 210,000
stockholders equity
common stock plus addition paid in capital 15,000
retained earnings 61,000
total liabilities and stockholders equity 300,000
Sales and costs are projected to grow at 40% a year for at least the next 4 years. Both current assets and accounts payable are projected to rise in proportion to sales. The firm is currently operating at 70% capacity, so it plans to increase fixed assets in proportion to sales. Interest expense will equal 10% of long-term debt outstanding at the start of the year. The firm will maintain a dividend payout ratio of 0.40. What is the required external financing over the next year?
Solutions
jeff jeffy answered 9 months agoRelated Solutions
The 2017 financial statements for Growth Industries are presented below. INCOME STATEMENT, 2017 Sales $ 350,000...
The 2017 financial statements for Growth Industries are
presented below.
INCOME STATEMENT, 2017
Sales
$
350,000
Costs
225,000
EBIT
$
125,000
Interest
expense
25,000
Taxable
income
$
100,000
Taxes (at
35%)
35,000
Net income
$
65,000
Dividends
$
26,000
Addition to
retained earnings
39,000
BALANCE SHEET, YEAR-END, 2017
Assets
Liabilities
Current
assets
Current
liabilities
Cash
$
4,000
Accounts
payable
$
11,000
Accounts
receivable
9,000
Total current
liabilities
$
11,000
Inventories
27,000
Long-term
debt
250,000
Total current
assets
$
40,000...
The 2017 financial statements for Growth Industries are presented below. INCOME STATEMENT, 2017 Sales $ 390,000...
The 2017 financial statements for Growth Industries are
presented below. INCOME STATEMENT, 2017 Sales $ 390,000 Costs
245,000 EBIT $ 145,000 Interest expense 29,000 Taxable income $
116,000 Taxes (at 35%) 40,600 Net income $ 75,400 Dividends $
30,160 Addition to retained earnings 45,240 BALANCE SHEET,
YEAR-END, 2017 Assets Liabilities Current assets Current
liabilities Cash $ 8,000 Accounts payable $ 15,000 Accounts
receivable 13,000 Total current liabilities $ 15,000 Inventories
29,000 Long-term debt 290,000 Total current assets $ 50,000
Stockholders’...
The 2017 financial statements for Growth Industries are presented below. INCOME STATEMENT, 2017 Sales $ 350,000...
The 2017 financial statements for Growth Industries are
presented below.
INCOME STATEMENT, 2017
Sales
$
350,000
Costs
225,000
EBIT
$
125,000
Interest expense
25,000
Taxable income
$
100,000
Taxes (at 35%)
35,000
Net income
$
65,000
Dividends
$
26,000
Addition to retained earnings
39,000
BALANCE SHEET, YEAR-END, 2017
Assets
Liabilities
Current assets
Current liabilities
Cash
$
4,000
Accounts payable
$
11,000
Accounts receivable
9,000
Total current liabilities
$
11,000
Inventories
27,000
Long-term debt
250,000
Total current assets
$
40,000...
The 2017 financial statements for Growth Industries are presented below. INCOME STATEMENT, 2017 Sales $ 290,000...
The 2017 financial statements for Growth Industries are
presented below. INCOME STATEMENT, 2017 Sales $ 290,000 Costs
195,000 EBIT $ 95,000 Interest expense 19,000 Taxable income $
76,000 Taxes (at 35%) 26,600 Net income $ 49,400 Dividends $ 29,640
Addition to retained earnings 19,760 BALANCE SHEET, YEAR-END, 2017
Assets Liabilities Current assets Current liabilities Cash $ 5,000
Accounts payable $ 12,000 Accounts receivable 10,000 Total current
liabilities $ 12,000 Inventories 25,000 Long-term debt 190,000
Total current assets $ 40,000 Stockholders’...
The 2017 financial statements for Growth Industries are presented below. INCOME STATEMENT, 2017 Sales $ 240,000...
The 2017 financial statements for Growth Industries are
presented below. INCOME STATEMENT, 2017 Sales $ 240,000 Costs
170,000 EBIT $ 70,000 Interest expense 14,000 Taxable income $
56,000 Taxes (at 35%) 19,600 Net income $ 36,400 Dividends $ 18,200
Addition to retained earnings 18,200 BALANCE SHEET, YEAR-END, 2017
Assets Liabilities Current assets Current liabilities Cash $ 7,000
Accounts payable $ 14,000 Accounts receivable 12,000 Total current
liabilities $ 14,000 Inventories 21,000 Long-term debt 140,000
Total current assets $ 40,000 Stockholders’...
The 2017 financial statements for Growth Industries are presented below. INCOME STATEMENT, 2017 Sales $ 240,000...
The 2017 financial statements for Growth Industries are
presented below.
INCOME STATEMENT, 2017
Sales
$
240,000
Costs
170,000
EBIT
$
70,000
Interest
expense
14,000
Taxable
income
$
56,000
Taxes (at
35%)
19,600
Net income
$
36,400
Dividends
$
18,200
Addition to
retained earnings
18,200
BALANCE SHEET, YEAR-END, 2017
Assets
Liabilities
Current
assets
Current
liabilities
Cash
$
7,000
Accounts
payable
$
14,000
Accounts
receivable
12,000
Total current
liabilities
$
14,000
Inventories
21,000
Long-term
debt
140,000
Total current
assets
$
40,000...
The 2017 financial statements for Growth Industries are presented below. INCOME STATEMENT, 2017 Sales $ 240,000...
The 2017 financial statements for Growth Industries are
presented below.
INCOME STATEMENT, 2017
Sales
$
240,000
Costs
170,000
EBIT
$
70,000
Interest
expense
14,000
Taxable
income
$
56,000
Taxes (at
35%)
19,600
Net income
$
36,400
Dividends
$
18,200
Addition to
retained earnings
18,200
BALANCE SHEET, YEAR-END, 2017
Assets
Liabilities
Current
assets
Current
liabilities
Cash
$
7,000
Accounts
payable
$
14,000
Accounts
receivable
12,000
Total current
liabilities
$
14,000
Inventories
21,000
Long-term
debt
140,000
Total current
assets
$
40,000...
The 2017 financial statements for Growth Industries are presented below. INCOME STATEMENT, 2017 Sales $ 370,000...
The 2017 financial statements for Growth Industries are
presented below.
INCOME STATEMENT, 2017
Sales
$
370,000
Costs
235,000
EBIT
$
135,000
Interest
expense
27,000
Taxable
income
$
108,000
Taxes (at
35%)
37,800
Net income
$
70,200
Dividends
$
42,120
Addition to
retained earnings
28,080
BALANCE SHEET, YEAR-END, 2017
Assets
Liabilities
Current
assets
Current
liabilities
Cash
$
6,000
Accounts
payable
$
13,000
Accounts
receivable
11,000
Total current
liabilities
$
13,000
Inventories
33,000
Long-term
debt
270,000
Total current
assets
$
50,000...
The 2019 financial statements for Growth Industries are presented below. INCOME STATEMENT, 2019 Sales $ 250,000...
The 2019 financial statements for Growth Industries are
presented below.
INCOME STATEMENT, 2019
Sales
$
250,000
Costs
175,000
EBIT
$
75,000
Interest expense
15,000
Taxable income
$
60,000
Taxes (at 21%)
12,600
Net income
$
47,400
Dividends
$
28,440
Addition to retained earnings
$
18,960
BALANCE SHEET, YEAR-END, 2019
Assets
Liabilities
Current assets
Current liabilities
Cash
$
8,000
Accounts payable
$
15,000
Accounts receivable
13,000
Total current liabilities
$
15,000
Inventories
29,000
Long-term debt
150,000
Total current assets
$...
The 2019 financial statements for Growth Industries are presented below. INCOME STATEMENT, 2019 Sales $ 300,000...
The 2019 financial statements for Growth Industries are
presented below.
INCOME STATEMENT, 2019
Sales
$
300,000
Costs
200,000
EBIT
$
100,000
Interest expense
20,000
Taxable income
$
80,000
Taxes (at 21%)
16,800
Net income
$
63,200
Dividends
$
18,960
Addition to retained earnings
$
44,240
BALANCE SHEET, YEAR-END, 2019
Assets
Liabilities
Current assets
Current liabilities
Cash
$
6,000
Accounts payable
$
13,000
Accounts receivable
11,000
Total current liabilities
$
13,000
Inventories
33,000
Long-term debt
200,000
Total current assets
$...
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