Question
LongLast Batteries has the abbreviated 2019 financial statements listed below. Your subordinate has started the pro-forma financials for 2020 based on the growth assumptions you've
- LongLast Batteries has the abbreviated 2019 financial statements listed below. Your subordinate has started the pro-forma financials for 2020 based on the growth assumptions you've given, and it's up to you to finalize them. You assume that the firm's tax rate will remain 21% and the firm will maintain a constant dividend payout ratio.
Income Statement
2019
2020 pro-forma
Sales
1,800
2,340
Costs of goods sold
1,000
1,300
Depreciation
100
120
Interest expense
10
11
Taxes
144.9
Net Income
545.1
Dividends
381.57
Balance Sheet
2019
2020 pro-forma
2019
2020 pro-forma
NWC
150
195
Long-term Debt
220
Gross Fixed Assets
1,100
1,400
Accumulated Depreciation
500
620
Equity
530
Net Fixed Assets
600
780
Total
750
975
Total
750
How much external financing will LongLast Batteries require to support these plans? (Assume that interest expense was calculated as 5% of the end of 2019 value and will not change with any additional financing needs.)
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Financial Reporting and Analysis
Authors: Flawrence Revsine, Daniel Collins, Bruce, Mittelstaedt, Leon
6th edition
9780077632182, 78025672, 77632184, 978-0078025679
