Major Manuscripts, Inc. 2012 Income Statement
Net sales	$	8,100
Cost of goods sold		7,100
Depreciation		260
Earnings before interest and taxes	$	740
Interest paid		81
Taxable Income	$	659
Taxes		255
Net income	$	404
Dividends	$	184

Major Manuscripts, Inc. 2012 Balance Sheet
	2012				2012
Cash	$	2,370		Accounts payable	$	1,990
Accounts rec.		910		Long-term debt		260
Inventory		2,550		Common stock	$	2,400
Total	$	5,830		Retained earnings		4,530
Net fixed assets		3,350
Total assets	$	9180		Total liabilities & equity	$	9,180

Major Manuscripts, Inc., is currently operating at 80 percent of capacity. All costs and net working capital vary directly with sales. The tax rate, the profit margin, and the dividend payout ratio will remain constant. How much additional debt is required if no new equity is raised and sales are projected to increase by 10 percent? Answers 242 142

341 583

199