Question

In: Finance

The financial statements of Isabella Painting Supply are shown in the table below. For simplicity, “Costs”...

  1. The financial statements of Isabella Painting Supply are shown in the table below. For simplicity, “Costs” include interest. Assume that Isabella’s assets are proportional to its sales. (10 points)

Income Statement

Sales

$

3,950

Costs

1,750

Pretax income

$

2,200

Taxes (at 40.0%)

880

Net income

$

1,320

Balance Sheet, Year-End

2019

2018

2019

2018

Net assets

$

6,000

$

5,700

Debt

$

2,500

$

2,400

Equity

3,500

3,300

Total

$

6,000

$

5,700

Total

$

6,000

$

5,700

a. Find Isabella’s required external funds if it maintains a dividend payout ratio of 50% and plans a growth rate of 35% in revenue, expenses, and assets in 2020. Assume the tax rate remains constant.  

b. If Isabella Painting Supply chooses not to issue new shares of stock, what is the value of debt in 2020?

c. Suppose that the firm plans instead to increase long-term debt only to $3,350 and does not wish to issue any new shares of stock. What must be the 2020 dividend payment now?

Solutions

Expert Solution

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

jeff jeffy answered 1 year ago
Next > < Previous

Related Solutions

The financial statements of Isabella Painting Supply are shown in the table below. For simplicity, “Costs”...
The financial statements of Isabella Painting Supply are shown in the table below. For simplicity, “Costs” include interest. Assume that Isabella’s assets are proportional to its sales. Income Statement Sales $ 3,950 Costs 1,750 Pretax income $ 2,200 Taxes (at 40.0%) 880 Net income $ 1,320 Balance Sheet, Year-End 2019 2018 2019 2018 Net assets $ 6,000 $ 5,700 Debt $ 2,500 $ 2,400 Equity 3,500 3,300 Total $ 6,000 $ 5,700 Total $ 6,000 $ 5,700 a. Find Isabella’s...
Financial? ratios: Financial leverage.??The financial statements for Tyler? Toys, Inc. are shown in the table below....
Financial? ratios: Financial leverage.??The financial statements for Tyler? Toys, Inc. are shown in the table below. Calculate the debt? ratio, times interest earned? ratio, and cash coverage ratio for 2013 and 2014 for Tyler Toys. Should any of these ratios or the change in a ratio warrant concern for the managers of Tyler Toys or the? shareholders? Tyler Toys, Inc. Income Statement for Years Ending December 31, 2013 and 2014 2014 2013 Revenue $14,146,827 $13,567,406 Cost of goods sold $-8,447,289...
Financial? ratios: Asset management.??The financial statements for Tyler? Toys, Inc. are shown in the table below....
Financial? ratios: Asset management.??The financial statements for Tyler? Toys, Inc. are shown in the table below. Calculate the inventory? turnover, days' sales in? inventory, receivables? turnover, days' sales in?receivables, and total asset turnover for 2013 and 2014 for Tyler Toys. Should any of these ratios or the change in a ratio warrant concern for the managers of Tyler Toys or the? shareholders? Tyler Toys, Inc. Income Statement for Years Ending December 31, 2013 and 2014 2014 2013 Revenue $14,147,668 $13,567,127...
The financial statements for Linked Ltd. are shown below:
The financial statements for Linked Ltd. are shown below: During the year, the company purchased a capital asset valued at $30,000; payment was made by issuing common shares. Additional capital assets were acquired for cash. Changes in other accounts were typical transactions. Required:1. Prepare the SCF using the indirect method. Include required note disclosure of non-cash transactions. Omit the separate disclosure of cash flow for interest, investment income, and income tax.2. Explain the company’s cash transactions for the year, based...
Financial statements for Askew Industries for 2021 are shown below (in thousands):
Financial statements for Askew Industries for 2021 are shown below (in thousands): 2021 Income StatementNet sales ....................................$ 9,000Cost of goods sold .....................(6,300)Gross profit .................................2,700Operating expenses .................(2,100)Interest expense .........................(200)Income tax expense ...................(100)Net income ................................$ 300   Required:Calculate the following ratios for 2021.1. Inventory turnover ratio2. Average days in inventory3. Receivables turnover ratio4. Average collection period5. Asset turnover ratio6. Profit margin on sales7. Return on assets8. Return on equity9. Equity multiplier10. Return on equity (using the DuPont framework)
2019 financial statements are shown below: Income Statement for December 31, 2019 Sales $4,000,000 Operating costs...
2019 financial statements are shown below: Income Statement for December 31, 2019 Sales $4,000,000 Operating costs 3,200,000 EBIT $ 800,000 Interest 120,000 Pre-tax earnings $ 680,000 Taxes (25%) 170,000 Net income 510,000 Dividends $ 190,000 Balance Sheet as of December 31, 2019 Cash $ 160,000 Accounts payable $ 360,000 Receivables 360,000 Line of credit 0 Inventories 720,000 Accruals 200,000 Total CA $1,240,000 Total CL $ 560,000 Fixed assets 4,000,000 Long-term bonds 1,000,000 Total Assets $5,240,000 Common stock 1,100,000 RE 2,580,000...
The financial statements and industry norms are shown below for Pamplin, Inc.: a. Compute the financial...
The financial statements and industry norms are shown below for Pamplin, Inc.: a. Compute the financial ratios for Pamplin for 2014 and for 2015 to compare both against the industry norms. b. How liquid is the firm? c. Areitsmanagersgeneratinganadequateoperatingprofitonthefirm’sassets? d. How is the firm financing its assets? e. Are its managers generating a good return on equity? INDUSTRY NORM Current ratio 5.00 Acid-test (quick) ratio 3.00 Inventory turnover 2.20 Average collection period 90.00 Debt ratio 0.33 Times interest earned 7.00...
Financial​ ratios: Financial leverage. The financial statements for Tyler​ Toys, Inc. are shown below. Calculate the...
Financial​ ratios: Financial leverage. The financial statements for Tyler​ Toys, Inc. are shown below. Calculate the debt​ ratio, times interest earned​ ratio, and cash coverage ratio for 2013 and 2014 for Tyler Toys. Should any of these ratios or the change in a ratio warrant concern for the managers of Tyler Toys or the​ shareholders? Tyler Toys, Inc. Income Statement for Years Ending December 31, 2013 and 2014 2014 2013 Revenue $14,147,996 $13,566,458 Cost of goods sold $-8,448,120 $-8,131,722 Selling,...
Financial​ ratios: Financial leverage. The financial statements for Tyler​ Toys, Inc. are shown below. Calculate the...
Financial​ ratios: Financial leverage. The financial statements for Tyler​ Toys, Inc. are shown below. Calculate the debt​ ratio, times interest earned​ ratio, and cash coverage ratio for 2013 and 2014 for Tyler Toys. Should any of these ratios or the change in a ratio warrant concern for the managers of Tyler Toys or the​ shareholders? Tyler Toys, Inc. Income Statement for Years Ending December 31, 2013 and 2014 2014 2013 Revenue $14,146,008 $13,566,936 Cost of goods sold $-8,448,426 $-8,131,134 Selling,...
Canadian Bacon Inc. financial statements are presented in the table below.
a)      Canadian Bacon Inc. financial statements are presented in the table below.            Based on the information in the table, and using a 365-day year, calculate operating cycle.Round the answers to two decimal placesBalance Sheet December 31, 2014Cash and marketable securities$132,000Accounts payable$399,000Accounts receivable$311,000Notes payable$98,500Inventories$512,000Accrued expenses$89,300Prepaid expenses$11,300Total current liabilities$586,800Total current assets$966,300Long-term debt$799,400Gross fixed assets$2,104,000Par value and paid-in-capital$298,000Less: accumulated depreciation$398,000Retained Earnings$988,100Net fixed assets$1,706,000Common Equity1,286,100Total assets$2,672,300Total liabilities and owner’s equity$2,672,300Income Statement, Year of 2014Net sales (all credit)$4,276,600.00Less: Cost of goods sold$3,292,982.00Selling and administrative expenses$349,000.00Depreciation expense$148,000.00EBIT$486,618.00Interest expense$49,600.00Earnings...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT