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The following condensed balance sheet is for Bach Company for the current fiscal year. The current...

  • The following condensed balance sheet is for Bach Company for the current fiscal year. The current year sales total $600,000 and net income is $30,000. Bach’s dividend payout ratio is 40%.
  • Cash $50,000 A/Payable $75,000
  • A/Receivable 80,000 Accruals 10,000
  • Inventories 60,000 Notes Payable 25,000
  • Total Current Assets $190,000 Total Current Liabilities $110,000
  • Fixed assets, net 110,000 Long-term Debt 50,000
  • Common Stock 80,000
  • Retained Earnings 60,000
  • Total Assets $300,000 Total Liab. & Equity $300,000
  • For the coming fiscal year, the company expects sales growth of 20%.
    Assuming the company is operating at full capacity and hence increase in sales results in increase in all assets, calculate the external funds need (EFN) for the coming year
  • a. -$600
  • b. $16,400
  • c. $21,400
  • d. $23,400
  • problem above. Assume the firm has unused capacity. So only current assets change spontaneously with changes in sales. What will be the external funds needed (EFN) with this assumption?
  • a. -$600
  • b. $16,400
  • c. $21,400
  • d. $23,400
  • problem above Assume Bach has unused capacity. It wants to change its dividend payout ratio such that its EFN will be zero. What should be its dividend payout ratio?
  • a. 20%
  • b. 32%
  • c. 52%
  • d. 42%

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

jeff jeffy answered 2 years ago
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