Question
Eagle Sports Supply has the following financial statements. Assume that Eagles assets are proportional to its sales. INCOME STATEMENT, 2022 Sales $ 1,250 Costs 240
Eagle Sports Supply has the following financial statements. Assume that Eagles assets are proportional to its sales.
INCOME STATEMENT, 2022 | |
Sales | $ 1,250 |
---|---|
Costs | 240 |
Interest | 50 |
Taxes | 190 |
Net income | $ 770 |
BALANCE SHEET, YEAR-END | |||||
2021 | 2022 | 2021 | 2022 | ||
---|---|---|---|---|---|
Assets | $ 3,400 | $ 3,700 | Debt | $ 700 | $ 800 |
Equity | 2,700 | 2,900 | |||
Total | $ 3,400 | $ 3,700 | Total | $ 3,400 | $ 3,700 |
Find Eagles required external funds if it maintains a dividend payout ratio of 60% and plans a growth rate of 20% 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 $900 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.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started