Question
Eagle Sports Supply has the following financial statements. Assume that Eagles assets are proportional to its sales. INCOME STATEMENT, 2022 Sales $ 1,000 Costs 190
Eagle Sports Supply has the following financial statements. Assume that Eagles assets are proportional to its sales.
INCOME STATEMENT, 2022 | |
---|---|
Sales | $ 1,000 |
Costs | 190 |
Interest | 70 |
Taxes | 140 |
Net income | $ 600 |
BALANCE SHEET, YEAR-END | |||||
---|---|---|---|---|---|
2021 | 2022 | 2021 | 2022 | ||
Assets | $ 2,900 | $ 3,200 | Debt | $ 1,100 | $ 1,200 |
Equity | 1,800 | 2,000 | |||
Total | $ 2,900 | $ 3,200 | Total | $ 2,900 | $ 3,200 |
Find Eagles required external funds if it maintains a dividend payout ratio of 70% and plans a growth rate of 15% in 2023.
Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
If Eagle chooses not to issue new shares of stock, what variable must be the balancing item?
What will be the value of this balancing item?
Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
Now suppose that the firm plans instead to increase long-term debt only to $1,300 and does not wish to issue any new shares of stock. What is now the balancing item?
What will be the value of this new balancing item?
Note: Do not round intermediate calculations. Round your answer to the nearest whole number.
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