64.

Use the below information to answer the following question.

Income Statement
For the Year
Sales	$42,700
Cost of goods sold	29,250
Depreciation	3,750
Earnings before interest and taxes	$ 9,700
Interest paid	1,360
Taxable income	$ 8,340
Taxes	2,840
Net income	$ 5,500
Dividends $1,925

Balance Sheet
End-of-Year
Cash	$1,320
Accounts receivable	3,780
Inventory	10,200
Total current assets	$15,300
Net fixed assets	33,600
Total assets	$48,900
Accounts payable	$ 3,650
Long-term debt	18,100
Common stock ($1 par value)	15,000
Retained earnings	12,150
Total Liab. & Equity	$48,900

The profit margin, the debt-equity ratio, and the dividend payout ratio for this firm are constant. Sales are expected to increase by $5,000 next year. What is the projected addition to retained earnings for next year?

A.	$3,575
B.	$1,885
C.	$1,909
D.	$3,994
E.	$2,386

Assume this firm is operating at full capacity. Also assume that all costs, net working capital, and fixed assets vary directly with sales. The debt-equity ratio and the dividend payout ratio are constant. What is the pro forma accounts payable value for next year if sales are projected to increase by 7.5 percent?

A.

$3,650

B.

$3,924

C.

$4,121

D.

$4,248

E.

$4,810

Assume this firm is operating at full capacity. Also assume that assets, costs, and current liabilities vary directly with sales. The dividend payout ratio is constant. What is the external financing need if sales increase by 14 percent?

A.

$1,816

B.

$1,268

C.

$1,031

D.

$3,504

E.

$2,260

This firm is expecting sales to decrease by 3 percent next year while the profit margin remains constant. The firm wants to increase the dividend payout ratio by 2.5 percent. What is the projected increase in retained earnings for next year?

A.	$1,711
B.	$1,867
C.	$3,334
D.	$1,969
E.	$3,438 show the explanation to the questions please.