The 2019 financial statements for Growth Industries are presented below. INCOME STATEMENT, 2019 Sales $ 330,000 Costs 215,000 EBIT $ 115,000 Interest expense 23,000 Taxable income $ 92,000 Taxes (at 21%) 19,320 Net income $ 72,680 Dividends $ 43,608 Addition to retained earnings $ 29,072 BALANCE SHEET, YEAR-END, 2019 Assets Liabilities Current assets Current liabilities Cash $ 9,000 Accounts payable $ 16,000 Accounts receivable 14,000 Total current liabilities $ 16,000 Inventories 37,000 Long-term debt 230,000 Total current assets $ 60,000 Stockholders’ equity Net plant and equipment 270,000 Common stock plus additional paid-in capital 15,000 Retained earnings 69,000 Total assets $ 330,000 Total liabilities plus stockholders' equity $ 330,000 Sales and costs are projected to grow at 30% a year for at least the next 4 years. Both current assets and accounts payable are projected to rise in proportion to sales. The firm is currently operating at 75% capacity, so it plans to increase fixed assets in proportion to sales. Interest expense will equal 10% of long-term debt outstanding at the start of the year. The firm will maintain a dividend payout ratio of 0.60. What is the required external financing over the next year? (Enter excess cash as a negative number with a minus sign.)

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 52E: Juroe Company provided the following income statement for last year: Juroes balance sheet as of...

See similar textbooks

Related questions

Question

The 2019 financial statements for Growth Industries are presented below.

INCOME STATEMENT, 2019
Sales			$	330,000
Costs				215,000
EBIT			$	115,000
Interest expense				23,000
Taxable income			$	92,000
Taxes (at 21%)				19,320
Net income			$	72,680
Dividends	$	43,608
Addition to retained earnings	$	29,072

BALANCE SHEET, YEAR-END, 2019
Assets			Liabilities
Current assets			Current liabilities
Cash	$	9,000	Accounts payable	$	16,000
Accounts receivable		14,000	Total current liabilities	$	16,000
Inventories		37,000	Long-term debt		230,000
Total current assets	$	60,000	Stockholders’ equity
Net plant and equipment		270,000	Common stock plus additional paid-in capital		15,000
			Retained earnings		69,000
Total assets	$	330,000	Total liabilities plus stockholders' equity	$	330,000

Sales and costs are projected to grow at 30% a year for at least the next 4 years. Both current assets and accounts payable are projected to rise in proportion to sales. The firm is currently operating at 75% capacity, so it plans to increase fixed assets in proportion to sales. Interest expense will equal 10% of long-term debt outstanding at the start of the year. The firm will maintain a dividend payout ratio of 0.60.

What is the required external financing over the next year? (Enter excess cash as a negative number with a minus sign.)

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions