Question

The most recent financial statements for Fleury Inc., follow. Sales for next year are projected to grow by 19 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 $ 552738

Costs 500801

Other expenses 10363

Earnings before interest and taxes $ ? I

nterest paid 10852 Taxable income $ ?

Taxes (30%) ? Net income ?

Dividends $ 6869 FLEURY,

INC Balance Sheet Assets Liabilities and Owners’ Equity Current assets Current liabilities Cash $ 21829

Accounts payable $ 57564

Accounts receivable 31641

Notes payable 15616

Inventory 74265

Long-term debt $ 109420

Fixed assets Net plant and equipment $ 412140

Owners’ equity Common stock and paid-in surplus $ 149257

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 19 percent growth rate in sales (round 2 decimal places)

Answer 1

	Last Year	Basis for projections	Next Year
Sales	552738.00	+19.00%	657758.22
Costs	500801.00	90.60% of sales	595953.19
Other expenses	10363.00	1.87% of sales	12331.97
EBIT	41574.00		49473.06
Interest	10852.00		10852.00
EBIT	30722.00		38621.06
Taxes (30%)	9216.60		11586.32
Net Income	21505.40		27034.74
Dividend	6869.00	31.94% of NI	8634.90
Addition to retained earnings	14636.40		18399.85
BALANCE SHEET:
Cash	21829.00	3.94% of sales	25976.51
Acounts Receivable	31641.00	5.72% of sales	37652.79
Inventory	74625.00	13.50% of sales	88803.75
Total current assets	128095.00		152433.05
Net PP&E	412140.00	74.56% of sales	490446.60
Total assets	540235.00		642879.65
Accounts payable	57564.00	6.00% of sales	68501.16
Notes payable	15616.00		15616.00
Total current liabilities	73180.00		84117.16
Long term debt	109420.00		109420.00
Common stock	149257.00		149257.00
Retained earnings	208378.00	+18399.85	226777.85
Total liabilities and Equity	540235.00		569572.01
		EFN Needed	73307.64