4.

Alter Bridge Mfg., Inc., is currently operating at only 88 percent of fixed asset capacity. Current sales are $880,000. How fast can sales grow before any new fixed assets are needed? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Maximum sales growth:________%

6.

Problem 4-24 Calculating EFN [LO2]

The most recent financial statements for Fleury Inc., follow. Sales for 2012 are projected to grow by 20 percent. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, fixed assets and accounts payable increase spontaneously with sales.

FLEURY, INC. 2011 Income Statement
Sales				$	755,000
Costs					590,000
Other expenses					11,000
Earnings before interest and taxes				$	154,000
Interest paid					12,000
Taxable income				$	142,000
Taxes (40%)					56,800
Net income					85,200
Dividends	$	34,080
Addition to retained earnings		51,120

FLEURY, INC. Balance Sheet as of December 31, 2011
Assets				Liabilities and Owners Equity
Current assets				Current liabilities
Cash	$	21,440		Accounts payable	$	55,600
Accounts receivable		33,760		Notes payable		14,800
Inventory		70,720		Total	$	70,400
Total	$	125,920		Long-term debt	$	138,000
Fixed assets				Owners equity
Net plant and equipment	$	270,000		Common stock and paid-in surplus	$	124,000
				Retained earnings		63,520
				Total	$	187,520
Total assets	$	395,920		Total liabilities and owners equity	$	395,920

If the firm is operating at full capacity and no new debt or equity is issued, what external financing is needed to support the 20 percent growth rate in sales? (Do not round intermediate calculations.)

EFN: $_____________________