How would Executive Fruit’s financial model change if the dividend payout ratio were cut to 1⁄3? Use the revised model to generate a new financial plan for 2000 assuming that debt is the balancing item. Show how the financial statements given in Table 1.16 would change. What would be required external financing?

Data from in Table 1.16

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TABLE 1.16 Second-stage pro forma balance sheet for Executive Fruit Co., 2000 (figures in thousands) Comment Assets Net working capital $ 220 10% higher Fixed assets 880 10% higher Total assets $1,100 Liabilities and shareholders' equity Long-term debt Shareholders' equity Total liabilities and $ 464 $ 636 shareholders' equity $1,100 10% higher 16% higher (new borrowing = $64; this is the balancing item) Increased by retained earnings Again equals total assets