Consider the following financial statements for Industrial Supply Company.(Actual)December 31,Balance sheetYear 1CommentsAssetsCash2$500,00025% increase (assumption)Accounts receivable2,200,00025% increase (assumption)Inventories2,800,00025% increase (assumption)Total current assets$ 5,500,000Fixed assets, net$ 1,000,000No increase (assumption)Total assets (A)$ 6,500,000Liabilities and EquityAccounts payable (CL)$ 1,400,00025% increase (assumption)Notes payable700,000Total current liabilities$ 2,100,000Long-term debt500,000No change (assumption)Stockholders' equity3,900,000Total liabilities and equity$ 6,500,000Income StatementYear 1 Income StatementYear 1Sales (S)$14,900,00025% increase (forecasted)Expenses, including interest & taxes14,000,000Earnings after taxes (EAT)$ 900,000Dividends paid (D)250,000No change (assumption)Retained earnings2$650,000Selected Financial RatiosCurrent ratio2.62 timesDebt ratio40.00%Return on stockholders' equity23.08%Net profit margin on sales6.04%Determine the amount of additional financing needed for Year 2 under the following conditions:Increase in SalesIncrease in Expenses$3,725,000$3,500,000Suppose that the company has excess fixed assets and that no increase in net fixed assets is required as sales are increased. Assume that the company plansto maintain its dividend payments at the same level in Year 2 as in Year 1. Round your answer to the nearest dollar.$

Particulars Amount % increase Change Cash 500000 25% 625000 Accounts Receivable 22,00,000 25%…

Consider the following financial statements for Industrial Supply Company. (Actual) December 31, Balance sheet Year 1 Comments Assets Cash 500,000 25% increase (assumption) Accounts receivable 2,200,000 25% increase (assumption) Inventories 2,800,000 25% increase (assumption) $ 5,500,000 $ 1,000,000 $ 6,500,000 Total current assets Fixed assets, net No increase (assumption) Total assets (A) Liabilities and Equity Accounts payable (CL) 1,400,000 25% increase (assumption) Notes payable 700,000 Total current liabilities 2,100,000 Long-term debt 500,000 No change (assumption) Stockholders' equity 3,900,000 Total liabilities and equity $ 6,500,000

Consider the following financial statements for Industrial Supply Company. (Actual) December 31, Balance sheet Year 1 Comments Assets Cash 500,000 25% increase (assumption) Accounts receivable 2,200,000 25% increase (assumption) Inventories 2,800,000 25% increase (assumption) $ 5,500,000 $ 1,000,000 $ 6,500,000 Total current assets Fixed assets, net No increase (assumption) Total assets (A) Liabilities and Equity Accounts payable (CL) 1,400,000 25% increase (assumption) Notes payable 700,000 Total current liabilities 2,100,000 Long-term debt 500,000 No change (assumption) Stockholders' equity 3,900,000 Total liabilities and equity $ 6,500,000

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter15: Financial Statement Analysis

Section: Chapter Questions

Problem 50E: Juroe Company provided the following income statement for last year: Juroes balance sheet as of...

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