Question

The most recent financial statements for Fleury Inc., follow. Sales for 2015 are projected to grow by 25 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. 2014 Income Statement Sales $ 753,000 Costs 588,000 Other expenses 24,000 Earnings before interest and taxes $ 141,000 Interest paid 10,000 Taxable income $ 131,000 Taxes (40%) 52,400 Net income $ 78,600 Dividends $ 31,440 Addition to retained earnings 47,160 FLEURY, INC. Balance Sheet as of December 31, 2014 Assets Liabilities and Owners’ Equity Current assets Current liabilities Cash $ 21,240 Accounts payable $ 55,400 Accounts receivable 33,560 Notes payable 14,600 Inventory 70,520 Total $ 70,000 Total $ 125,320 Long-term debt $ 101,000 Fixed assets Owners’ equity Net plant and equipment $ 210,000 Common stock and paid-in surplus $ 100,000 Retained earnings 64,320 Total $ 164,320 Total assets $ 335,320 Total liabilities and owners’ equity $ 335,320 If the firm is operating at full capacity and no new debt or equity is issued, what external financing is needed to support the 25 percent growth rate in sales? All the other Chegg answers are wrong please show me all work! thank you!

Answer 1

			2014	2015
		Sales	$753,000	$941,250	(1.25*753000)
		Costs	$588,000	$735,000	(1.25*588000)
		Other expenses:	$24,000	$30,000.00	(1.25*24000)
		Earning before interest and taxes	$141,000	$176,250
		Interest paid	$10,000	$10,000
		Taxable income	$131,000	$166,250
		Taxes (40%)	$52,400	$66,500
		Net Income	$78,600	$99,750
		Dividend	$31,440	$39,900	(31440/78600)*99750
		Addition to retained earnings	$47,160	$59,850
		Balance Sheet
		ASSETS
		Cash	$21,240
		Account Receivable	$33,560
		Inventory	$70,520
		Net Plant and Equipment	$210,000
		Total Assets	$335,320
		LIABILITIES
		Accounts payable	$55,400
		Notes payable	$14,600
		Long term debts	$101,000
		Total liabilities	$171,000
		Owners Equity
		Common stock and paid in surplus	$100,000
		Retained earning	$64,320
		Total owners equity	$164,320
		Total Liabilities and owners equity	$335,320
	A	Increase in assets	$83,830	(0.25*335320)
	B	Increase in accounts payable	$13,850	(0.25*55400)
	C	Increase in retained earning	$59,850
	A-B-C	EXTERNAL FINANCE REQUIRED	$10,130