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	$	562090
Costs		503455
Other expenses		16099
Earnings before interest and taxes	$	?
Interest paid		13102
Taxable income	$	?
Taxes (30%)		?
Net income		?
Dividends	$	5812

FLEURY, INC.
Balance Sheet
Assets				Liabilities and Owners’ Equity
Current assets				Current liabilities
Cash	$	20382		Accounts payable	$	50653
Accounts receivable		32467		Notes payable		19206
Inventory		72853
				Long-term debt	$	106603
Fixed assets
Net plant and equipment	$	408667		Owners’ equity
				Common stock and paid-in surplus	$	132093
				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?

(Omit the "$" sign and commas in your response. Enter your answer rounded to 2 decimal places. For example, $1,200.456 should be entered as 1200.46.)

Answer 1

	Last Year	Basis for projections	Next Year
Sales	562090.00	+22.00%	685749.80
Costs	503455.00	89.57% of sales	614215.10
Other expenses	16099.00	2.86% of sales	19640.78
EBIT	42536.00		51893.92
Interest	13102.00		13102.00
EBIT	29434.00		38791.92
Taxes (30%)	8830.20		11637.58
Net Income	20603.80		27154.34
Dividend	5812.00	28.21% of NI	7660.24
Addition to retained earnings	14791.80		19494.10
BALANCE SHEET:
Cash	20382.00	3.63% of sales	24866.04
Acounts Receivable	32467.00	5.78% of sales	39609.74
Inventory	72853.00	12.96% of sales	88880.66
Total current assets	125702.00		153356.44
Net PP&E	408667.00	72.70% of sales	498573.74
Total assets	534369.00		651930.18
Accounts payable	50653.00	9.01% of sales	61796.66
Notes payable	19206.00		19206.00
Total current liabilities	69859.00		81002.66
Long term debt	106603.00		106603.00
Common stock	132093.00		132093.00
Retained earnings	225814.00	+19494.10	245308.10
Total liabilities and Equity	534369.00		565006.76
		EFN Needed	86923.42