The most recent financial statements for Cardinal, Inc., are shown here: Income Statement Balance Sheet Sales$33,000 Assets$77,200 Debt$40,200 Costs 18,650 Equity 37,000 Taxable income$14,350 Total$77,200 Total$77,200 Taxes (24%) 3,444 Net income$10,906 Assets and costs are proportional to sales. Debt and equity are not. A dividend of $4,200 was paid, and the company wishes to maintain a constant payout ratio. Next year’s sales are projected to be $37,950. What is the external financing needed? (Do not round intermediate calculations.)

Given information: Dividend paid amounted to $4,200 Sales projected for the next year to be $37,950

Answered: The most recent financial statements…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter3: Evaluation Of Financial Performance

Section: Chapter Questions

Problem 2P

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The most recent financial statements for Cardinal, Inc., are shown here:

Income Statement		Balance Sheet
Sales	$	33,000	Assets	$	77,200	Debt	$	40,200
Costs		18,650				Equity		37,000

Taxable income	$	14,350	Total	$	77,200	Total	$	77,200

Taxes (24%)		3,444

Net income	$	10,906

Assets and costs are proportional to sales. Debt and equity are not. A dividend of $4,200 was paid, and the company wishes to maintain a constant payout ratio. Next year’s sales are projected to be $37,950.

What is the external financing needed? (Do not round intermediate calculations.)

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