USING COMMON SIZE STATEMENTS Logo, Inc., owns and operates a small chain of sportswear stores located near colleges and universities. Logo has experienced significant growth in recent years. The following data are available for Logo:

Logo, Inc.

Comparative Statements of Income Year Ended December 31,

(In thousands) 2009 2008 2007 Sales $51,638 $41,310 $34,425 Cost of goods sold 31,050 24,840 20,700 Gross margin $20,588 $16,470 $13,725 Other income, net 383 426 405

$20,971 $16,896 $14,130 Costs and expenses:

Selling and administrative $16,570 $13,465 $11,350 Interest 1,237 765 554 Total costs and expenses $17,807 $14,230 $11,904 Income before income taxes $ 3,164 $ 2,666 $ 2,226 Provision for income taxes 885 746 623 Net income $ 2,279 $ 1,920 $ 1,603 Logo, Inc.

Comparative Balance Sheets

(In thousands)

December 31, ASSETS 2009 2008 2007 Current assets:

Cash $ 360 $ 293 $ 236 Accounts receivable 4,658 3,690 3,285 Inventories 6,064 4,478 3,442 Total current assets $11,082 $ 8,461 $ 6,963 Property, plant, and equipment (net) 4,860 3,600 2,756 Other assets 574 585 562 Total assets $16,516 $12,646 $10,281 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities:
Short-term notes payable $ 4,230 $ 1,620 $ 450 Accounts payable 1,147 1,013 720 Total current liabilities $ 5,377 $ 2,633 $ 1,170 Long-term debt 3,150 3,150 3,150 Total liabilities $ 8,527 $ 5,783 $ 4,320 Paid-in capital $ 4,725 $ 4,725 $ 4,725 Retained earnings 3,264 2,138 1,236 Total stockholders’ equity $ 7,989 $ 6,863 $ 5,961 Total liabilities and stockholders’ equity $16,516 $12,646 $10,281 Required:
. Determine how much Logo’s sales, net income, and assets have grown during these three years.
. Explain how Logo has financed the increase in assets.
. Determine whether Logo’s liquidity is adequate.
. Explain why interest expense is growing.
. If Logo’s sales grow by 25 percent in 2010, what would you expect net income to be?
. If Logo’s assets must grow by 25 percent to support the 25 percent sales increase and if 50 percent of net income is paid in dividends, how much capital must Logo raise?