(A) Calculate the firms full capacity sales.
(B) Calculate External Financing Needed (EFN) using forecasted income statements and balance sheet (You may copy income statement and balance sheet to the answer space below and estimate the numbers for 2020)
(13 points) Using the following information, answer the questions below. MoonStar expects its sales increase by 9% for 2020. Depreciation expense, Interest expense and dividend payout amount will remain constant; the tax rate will also remain constant Cost of goods sold, current assets, and accounts payable increase with sales, the term is operating at its 75% capacity and no new debt or equity is issued. MoonStar Inc. Income Statement (Sin millions) 2019 2020 $1.000,0 Net sales $350.0 Less: Cost of goods sold $120.0 Less: Depreciation expense S90.0 Less: Other expenses S440.0 Earnings before interest and taxes S100.0 Less: Interest paid Taxable Income S340.0 S136.0 Less: Taxes (40%) S204.0 Net income $28.8 Dividends $175.2 Additions to Retained Earnings MoonStar Inc 2018 and 2019 Balance Sheets ($ in millions) 2019 20201 2019 2020 Cash 50.0 Accounts payable 137.8 Accounts rec. 245.0 Notes payable 55.0 Inventory 315.0 Total 192.8 Total 610.0 Long-term debt 767.0 Net fixed assets 1300.0 Common stock 665.0 285.2 Retained earnings Total liab.& & equity Total assets 1910.0 1910.0 (A) Calculate the firm's full capacity sales. (B) Calculate External Financing Needed (EFN) using forecasted income statements and balance sheet (You may copy income statement and balance sheet to the answer space below and estimate the numbers for 2020). (13 points) Using the following information, answer the questions below. MoonStar expects its sales increase by 9% for 2020. Depreciation expense, Interest expense and dividend payout amount will remain constant; the tax rate will also remain constant Cost of goods sold, current assets, and accounts payable increase with sales, the term is operating at its 75% capacity and no new debt or equity is issued. MoonStar Inc. Income Statement (Sin millions) 2019 2020 $1.000,0 Net sales $350.0 Less: Cost of goods sold $120.0 Less: Depreciation expense S90.0 Less: Other expenses S440.0 Earnings before interest and taxes S100.0 Less: Interest paid Taxable Income S340.0 S136.0 Less: Taxes (40%) S204.0 Net income $28.8 Dividends $175.2 Additions to Retained Earnings MoonStar Inc 2018 and 2019 Balance Sheets ($ in millions) 2019 20201 2019 2020 Cash 50.0 Accounts payable 137.8 Accounts rec. 245.0 Notes payable 55.0 Inventory 315.0 Total 192.8 Total 610.0 Long-term debt 767.0 Net fixed assets 1300.0 Common stock 665.0 285.2 Retained earnings Total liab.& & equity Total assets 1910.0 1910.0 (A) Calculate the firm's full capacity sales. (B) Calculate External Financing Needed (EFN) using forecasted income statements and balance sheet (You may copy income statement and balance sheet to the answer space below and estimate the numbers for 2020)
