Question

In: Finance

The Optical Scam Company has forecast an 17 percent sales growth rate for next year. The...

The Optical Scam Company has forecast an 17 percent sales growth rate for next year. The current financial statements are shown below. Current assets, fixed assets, and short-term debt are proportional to sales.
INCOME STATEMENT
  Sales $ 44,000,000
  Costs 35,200,000
  Taxable income $ 8,800,000
  Taxes 3,080,000
  Net income $ 5,720,000
       Dividends $ 1,430,000
       Additions to retained earnings $ 4,290,000  
BALANCE SHEET
Assets Liabilities and Equity
  Current assets $ 14,040,000   Short-term debt $ 10,560,000
  Long-term debt 11,060,000
  Fixed assets 37,000,000
  Common stock $ 3,700,000
  Accumulated retained earnings 25,720,000
       Total equity $ 29,420,000
  Total assets $ 51,040,000   Total liabilities and equity $ 51,040,000

    

  External funds needed $   

   

  

  Sustainable growth rate %

   

Suppose Optical Scam eliminates its dividend entirely. What is the new EFN?

   

New External funds needed $   

Solutions

Expert Solution

jeff jeffy answered 1 year ago
Next > < Previous

Related Solutions

The Optical Scam Company has forecast a sales growth rate of 25 percent for next year....
The Optical Scam Company has forecast a sales growth rate of 25 percent for next year. The current financial statements are shown here:    Income Statement   Sales $ 32,300,000   Costs 26,971,600   Taxable income $ 5,328,400   Taxes 1,864,940   Net income $ 3,463,460   Dividends $ 1,385,384   Addition to retained earnings 2,078,076    Balance Sheet Assets Liabilities and Equity   Current assets $ 7,390,000   Short-term debt $ 6,460,000         Long-term debt 2,584,000   Fixed assets 17,804,000      Common stock $ 4,306,000   Accumulated retained earnings...
The Optical Scam Company has forecast an 20 percent sales growth rate for next year. The...
The Optical Scam Company has forecast an 20 percent sales growth rate for next year. The current financial statements are shown below. Current assets, fixed assets, and short-term debt are proportional to sales.      INCOME STATEMENT   Sales $ 35,000,000   Costs 27,100,000   Taxable income $ 7,900,000   Taxes 2,765,000   Net income $ 5,135,000        Dividends $ 1,027,000        Additions to retained earnings $ 4,108,000       BALANCE SHEET Assets Liabilities and Equity   Current assets $ 9,800,000   Short-term debt $ 5,600,000   Long-term debt 6,100,000   Fixed assets...
The Optical Scam Company has forecast a sales growth rate of 25 percent for next year....
The Optical Scam Company has forecast a sales growth rate of 25 percent for next year. Current assets, fixed assets, and short-term debt are proportional to sales. The current financial statements are shown here:    INCOME STATEMENT Sales $ 31,000,000 Costs 26,367,600 Taxable income $ 4,632,400 Taxes 1,621,340 Net income $ 3,011,060 Dividends $ 1,204,424 Addition to retained earnings 1,806,636    BALANCE SHEET Assets Liabilities and Equity Current assets $ 7,260,000 Short-term debt $ 8,060,000 Long-term debt 1,588,750 Fixed assets...
The Optical Scam Company has forecast a sales growth rate of 20 percent for next year....
The Optical Scam Company has forecast a sales growth rate of 20 percent for next year. Current assets, fixed assets, and short-term debt are proportional to sales. The current financial statements are shown here:    INCOME STATEMENT Sales $ 32,400,000 Costs 28,531,000 Taxable income $ 3,869,000 Taxes 1,354,150 Net income $ 2,514,850 Dividends $ 1,005,940 Addition to retained earnings 1,508,910    BALANCE SHEET Assets Liabilities and Equity Current assets $ 7,400,000 Short-term debt $ 7,128,000 Long-term debt 3,969,000 Fixed assets...
The Optical Scam Company has forecast a sales growth rate of 20 percent for next year....
The Optical Scam Company has forecast a sales growth rate of 20 percent for next year. The current financial statements are shown here:    Income Statement   Sales $ 31,500,000   Costs 26,641,500   Taxable income $ 4,858,500   Taxes 1,700,475   Net income $ 3,158,025   Dividends $ 1,263,210   Addition to retained earnings 1,894,815    Balance Sheet Assets Liabilities and Equity   Current assets $ 7,310,000   Short-term debt $ 5,985,000         Long-term debt 4,130,000   Fixed assets 19,780,000      Common stock $ 4,080,000   Accumulated retained earnings...
The Optical Scam Company has forecast a sales growth rate of 20 percent for next year....
The Optical Scam Company has forecast a sales growth rate of 20 percent for next year. Current assets, fixed assets, and short-term debt are proportional to sales. The current financial statements are shown here:    INCOME STATEMENT Sales $ 31,600,000 Costs 26,675,500 Taxable income $ 4,924,500 Taxes 1,723,575 Net income $ 3,200,925 Dividends $ 1,280,370 Addition to retained earnings 1,920,555    BALANCE SHEET Assets Liabilities and Equity Current assets $ 7,320,000 Short-term debt $ 5,688,000 Long-term debt 6,636,000 Fixed assets...
The Optical Scam Company has forecast a sales growth of 20 percent for next year. The...
The Optical Scam Company has forecast a sales growth of 20 percent for next year. The current financial statements are shown here:    Income Statement   Sales $ 30,600,000   Costs 26,267,200   Taxable income $ 4,332,800   Taxes 1,516,480   Net income $ 2,816,320   Dividends $ 1,126,528   Addition to retained earnings 1,689,792    Balance Sheet Assets Liabilities and Owners' Equity   Current assets $ 7,220,000   Short-term debt $ 6,732,000   Long-term debt 5,610,000   Fixed assets 17,872,000   Common stock $ 2,420,000   Accumulated retained earnings 10,330,000   Total equity...
The Optical Scam Company has forecast a sales growth of 25 percent for next year. The...
The Optical Scam Company has forecast a sales growth of 25 percent for next year. The current financial statements are shown here:    Income Statement   Sales $ 32,100,000   Costs 26,512,400   Taxable income $ 5,587,600   Taxes 1,955,660   Net income $ 3,631,940   Dividends $ 1,452,776   Addition to retained earnings 2,179,164    Balance Sheet Assets Liabilities and Owners' Equity   Current assets $ 7,370,000   Short-term debt $ 7,383,000   Long-term debt 5,162,750   Fixed assets 18,952,000   Common stock $ 1,707,250   Accumulated retained earnings 12,069,000   Total equity...
      The Optical Scam Company has forecast a sales growth of 25 percent for next...
      The Optical Scam Company has forecast a sales growth of 25 percent for next year. The current financial statements are shown here:    Income Statement   Sales $ 32,000,000   Costs 26,309,400   Taxable income $ 5,690,600   Taxes 1,991,710   Net income $ 3,698,890   Dividends $ 1,479,556   Addition to retained earnings 2,219,334    Balance Sheet Assets Liabilities and Owners' Equity   Current assets $ 7,360,000   Accounts payable $ 7,040,000   Long-term debt 2,240,000   Fixed assets 18,560,000   Common stock $ 6,070,000   Accumulated retained earnings 10,570,000...
Problem 3-13 External Funds Needed The Optical Scam Company has forecast a sales growth rate of...
Problem 3-13 External Funds Needed The Optical Scam Company has forecast a sales growth rate of 20 percent for next year. The current financial statements are shown here:    Income Statement   Sales $ 31,200,000   Costs 26,673,600   Taxable income $ 4,526,400   Taxes 1,584,240   Net income $ 2,942,160   Dividends $ 1,176,864   Addition to retained earnings 1,765,296    Balance Sheet Assets Liabilities and Equity   Current assets $ 7,280,000   Short-term debt $ 6,552,000         Long-term debt 5,248,000   Fixed assets 19,240,000      Common stock...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT