Consider the following most recent financial statements for Tom Company. Assume that for next year 2020, the sales are expected to grow by 30%. Tom companys suppliers are offering a 3% discount on purchases if the company makes payment in 15 days, which the company has agreed to do. COGS and Interest expenses are proportional to sales. The tax rate will remain the same. The companys dividend payout ratio is 40%. How much will be added to retained earnings balance in year 2020? Make sure you apply the 3% discount to the COGS.

Tom Company

Income Statement

During 2019

($ in millions)

Net sales Cost of goods sold (COGS) EBIT Interest expenses EBT Taxes Net Income

$3,000 1,800 $1,200 300 900 270 $630

Tom Company

Balance Sheets

12/31/2019

($ in millions)

Cash Accounts receivable Inventory Current Assets Net fixed assets Total Assets

$150 500 350 $1,000 3,500 $4,500

Accounts payable Notes payable Current Liab. Long-term debt Owners Equity Total SE and Liab.

$450 600 $1,050 1,500 1,950 $4,500