Question
In: Finance
The most recent financial statements for GPS, Inc., are shown here: Income Statement Balance Sheet Sales...
|
The most recent financial statements for GPS, Inc., are shown here: |
| Income Statement | Balance Sheet | ||||
| Sales | $23,800 | Assets | $121,000 | Debt | $43,600 |
| Costs |
16,900 |
Equity | 77,400 | ||
| Taxable income | $6,900 | Total |
$121,000 |
Total |
$121,000 |
| Taxes (30%) | 2,070 | ||||
| Net income |
$4,830 |
||||
|
Assets and costs are proportional to sales. Debt and equity are not. A dividend of $1,470 was paid, and the company wishes to maintain a constant payout ratio. Next year's sales are projected to be $29,400. |
| Required: |
|
What is the external financing needed? |
Solutions
Expert Solution
Growth rate in sales=(29400-23800)/23800
=23.5294118%(Approx)
Dividend payout ratio=Dividend payout/Net income
=1470/4830
=0.304347826
| Sales | 29400 |
| Costs(16900*1.235294118) | 20876.47 |
| Taxable income | 8523.53 |
| Taxes(8523.53*30%) | 2557.06 |
| Net income | 5966.47 |
| Less:Dividends(5966.47*0.304347826) | 1815.88 |
| Addition to retained earnings | 4150.59 |
Total assets would be=121,000*1.235294118
=$149470.59
Total equity would be=77400+Addition to retained earnings
=77400+4150.59=$81550.59
Total assets=Total liabilities+Total equity
Hence external financing needed=149470.59-81550.59-43600
=$24320(Approx)
jeff jeffy answered 2 years agoRelated Solutions
The most recent financial statements for GPS, Inc., are shown here: Income Statement Balance Sheet Sales...
The most recent financial statements for GPS, Inc., are shown
here:
Income Statement
Balance Sheet
Sales
$22,900
Assets
$113,000
Debt
$31,600
Costs
16,600
Equity
81,400
Taxable income
$6,300
Total
$113,000
Total
$113,000
Taxes (30%)
1,890
Net income
$4,410
Assets and costs are proportional to sales. Debt and equity are
not. A dividend of $1,500 was paid, and the company wishes to
maintain a constant payout ratio. Next year's sales are projected
to be $29,200.
Required:
What is the external financing...
The most recent financial statements for GPS, Inc., are shown here: Income Statement Balance Sheet Sales...
The most recent financial statements for GPS, Inc., are shown
here:
Income Statement
Balance Sheet
Sales
$22,300
Assets
$105,000
Debt
$33,600
Costs
16,000
Equity
71,400
Taxable income
$6,300
Total
$105,000
Total
$105,000
Taxes (30%)
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Net
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Costs
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Taxable Income
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Costs
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Taxable Income
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Taxes (40%)
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Net Income
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Costs
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Taxable Income
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Taxes (40%)
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Net Income
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Balance Sheet
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Debt
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Costs
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Taxable Income
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Balance Sheet
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