Question
Douglass Enterprises Income Statement for the Present Year Sales $4,840 Costs $4,120 Taxable Income $720 Taxes $245 Net Income $475 Dividends $190 Addition to ret.
Douglass Enterprises Income Statement for the Present Year
Sales
$4,840
Costs
$4,120
Taxable Income
$720
Taxes
$245
Net Income
$475
Dividends
$190
Addition to ret. earnings
$285
Douglass Enterprises Balance Sheet for the Present Year
Cash
$1,010
Accounts payable
$536
Accounts rec.
$302
Notes payable
$1,500
Inventory
$361
Current liabilities
$2,036
Current assets
$1,673
Long-term debt
$1,200
Fixed assets
$5,200
Common stock
$3,000
Retained earnings
$637
Total assets
$6,873
Total liabilities. &
equity
$6,873
Assets, accounts payable and costs are proportional to sales. Debt and equity are not.
The sales of Douglass Enterprises are expected to increase by 10% next year. The debt-equity ratio and the dividend payout ratio are to be held constant. Currently the firm is producing at 88% of capacity. What is the required increase in net fixed assets?
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First lets find out the current level of sales Sales 4840 Next we can use the information given to f...
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Financial ACCT2
Authors: Norman H. Godwin, C. Wayne Alderman
2nd edition
9781285632544, 1111530769, 1285632540, 978-1111530761
