wen’s Electronics has nine operating plants in seven southwestern states. Sales for last year were $100 million, and the balance sheet at year-end is similar in percentage of sales to that of previous years (and this will continue in the future). All assets (including fixed assets) and current liabilities will vary directly with sales. The firm is working at full capacity. Balance Sheet(in $ millions)AssetsLiabilities and Stockholders' EquityCash$5Accounts payable$18Accounts receivable 23Accrued wages 5Inventory 26Accrued taxes 11Current assets$54Current liabilities$34Fixed assets 43Notes payable 13 Common stock 18 Retained earnings 32Total assets$97Total liabilities and stockholders' equity$97 Owen’s Electronics has an aftertax profit margin of 8 percent and a dividend payout ratio of 30 percent. If sales grow by 15 percent next year, determine how many dollars of new funds are needed to finance the growth. (Do not round intermediate calculations. Enter your answer in dollars, not millions, (e.g., $1,234,567).)

The External Funds needed: The external fund needed is an estimation of the additional investment…

Answered: wen’s Electronics has nine operating…

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter16: Financial Planning And Control

Section: Chapter Questions

Problem 1PROB

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wen’s Electronics has nine operating plants in seven southwestern states. Sales for last year were $100 million, and the balance sheet at year-end is similar in percentage of sales to that of previous years (and this will continue in the future). All assets (including fixed assets) and current liabilities will vary directly with sales. The firm is working at full capacity.

Balance Sheet (in $ millions)
Assets	Liabilities and Stockholders' Equity
Cash	$	5	Accounts payable	$	18
Accounts receivable		23	Accrued wages		5
Inventory		26	Accrued taxes		11
Current assets	$	54	Current liabilities	$	34
Fixed assets		43	Notes payable		13
			Common stock		18
			Retained earnings		32
Total assets	$	97	Total liabilities and stockholders' equity	$	97

Owen’s Electronics has an aftertax profit margin of 8 percent and a dividend payout ratio of 30 percent.

If sales grow by 15 percent next year, determine how many dollars of new funds are needed to finance the growth. (Do not round intermediate calculations. Enter your answer in dollars, not millions, (e.g., $1,234,567).)

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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