Question

The most recent financial statements for Fleury Inc., follow. Sales for next year are projected to grow by 22 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. Income Statement Sales $ 573092 Costs 507669 Other expenses 10908 Earnings before interest and taxes $ ? Interest paid 13967 Taxable income $ ? Taxes (30%) ? Net income ? Dividends $ 8316 FLEURY, INC. Balance Sheet Assets Liabilities and Owners’ Equity Current assets Current liabilities Cash $ 22608 Accounts payable $ 51034 Accounts receivable 39842 Notes payable 17061 Inventory 70054 Long-term debt $ 118838 Fixed assets Net plant and equipment $ 444760 Owners’ equity Common stock and paid-in surplus $ 124367 Retained earnings ? If the firm is operating at full capacity and no new debt or equity is issued, what external financing is needed to support the 22 percent growth rate in sales?

Answer 1