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Eagle's assets are proportional to its sales. Income Statement Sales Costs Pretax income Taxes (at 30.0%) Net income $1,150 350 800 240 560

Eagle's assets are proportional to its sales. Income Statement Sales Costs Pretax income Taxes (at 30.0%) Net income $1,150 350 800 240 560

Managerial Accounting: The Cornerstone of Business Decision-Making
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 40E: Cuneo Companys income statements for the last 3 years are as follows: Refer to the information for...
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The financial statements of Eagle Sport Supply are shown in the table below. For simplicity, "Costs" include interest. Assume that Eagle's assets are proportional to its sales. Income Statement Sales Costs Pretax income Taxes (at 30.0%) Net income $1,150 350 $ 800 240 560 Total Balance Sheet, Year-End Debt Equity $3,200 $2,900 Total $3,200 2019 2018 Net assets $3,200 $2,900 Answer is complete and correct. a. Find Eagle's required external funds if it maintains a dividend payout ratio of 50% and plans a growth rate of 20% in revenue, expenses, and assets in 2020. Assume the tax rate remains constant. (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.) External funds needed $ 304 2019 $1,100 2,100 b. If Eagle chooses not to issue new shares of stock, what is the value of debt in 2020? (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.) Answer is complete but not entirely correct. Value of debt s 304 2018 $1,000 1,900 $2,900 Answer is complete and correct. c. Suppose that the firm plans instead to increase long-term debt only to $1,250 and does not wish to issue any new shares of stock. What must be the 2020 dividend payment now? (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.) Dividends $ 182
Transcribed Image Text:The financial statements of Eagle Sport Supply are shown in the table below. For simplicity, "Costs" include interest. Assume that Eagle's assets are proportional to its sales. Income Statement Sales Costs Pretax income Taxes (at 30.0%) Net income $1,150 350 $ 800 240 560 Total Balance Sheet, Year-End Debt Equity $3,200 $2,900 Total $3,200 2019 2018 Net assets $3,200 $2,900 Answer is complete and correct. a. Find Eagle's required external funds if it maintains a dividend payout ratio of 50% and plans a growth rate of 20% in revenue, expenses, and assets in 2020. Assume the tax rate remains constant. (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.) External funds needed $ 304 2019 $1,100 2,100 b. If Eagle chooses not to issue new shares of stock, what is the value of debt in 2020? (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.) Answer is complete but not entirely correct. Value of debt s 304 2018 $1,000 1,900 $2,900 Answer is complete and correct. c. Suppose that the firm plans instead to increase long-term debt only to $1,250 and does not wish to issue any new shares of stock. What must be the 2020 dividend payment now? (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.) Dividends $ 182
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