b. What would be the need for external financing of the net profit margin went up to 9.5 percent and dividend payout ratio was increase to 50% percent? Explain.

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter4: Financial Planning And Forecasting
Section: Chapter Questions
Problem 7P
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Dopey, Inc., a national clothing chain had sales of P 300 million last year. The business has a steady net profit margin of 8 percent and a dividend payout ratio of 25 percent. The statement of financial position for the end of last year is shown next. The company’s marketing staff has told the president that in the coming years there will be large increase in the demand for coats and slacks. A sales increase of 15 percent is forecast for the company. All statement of financial position items are expected to maintain the same percent- of-sales relationship as last year, except for common stock and retained earnings. No change is scheduled in the number of common stock shares outstanding and retained earnings will change as dictated by the profits and dividend policy pf the company. (Remember the net profit margin is 8 percent). a. Will external financing be required for the company during the coming year? b. What would be the need for external financing of the net profit margin went up to 9.5 percent and dividend payout ratio was increase to 50% percent? Explain.
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