Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Owens Electronics has nine operating plants in seven southwestern states. Sales for last year were $100 million, and the balance sheet at year-end is similar

Owens Electronics has nine operating plants in seven southwestern states. Sales for last year were $100 million, and the balance sheet at year-end is similar in percentage of sales to that of previous years (and this will continue in the future). All assets (including fixed assets) and current liabilities will vary directly with sales. The firm is working at full capacity.

Balance Sheet (in $ millions)
Assets Liabilities and Stockholders' Equity
Cash $ 9 Accounts payable $ 18
Accounts receivable 26 Accrued wages 7
Inventory 24 Accrued taxes 13
Current assets $ 59 Current liabilities $ 38
Fixed assets 45 Notes payable 12
Common stock 17
Retained earnings 37
Total assets $ 104 Total liabilities and stockholders' equity $ 104

Owens Electronics has an aftertax profit margin of 6 percent and a dividend payout ratio of 40 percent.

If sales grow by 25 percent next year, determine how many dollars of new funds are needed to finance the growth. (Do not round intermediate calculations. Enter your answer in dollars, not millions, (e.g., $1,234,567).)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

High Frequency Financial Econometrics

Authors: Yacine Aït Sahalia, Jean Jacod

1st Edition

0691161437, 978-0691161433

More Books

Students also viewed these Finance questions

Question

Prove that 0 Answered: 1 week ago

Answered: 1 week ago

Question

can you show the steps instead of using an excel sheet?

Answered: 1 week ago

Question

1. Why do people tell lies on their CVs?

Answered: 1 week ago

Question

2. What is the difference between an embellishment and a lie?

Answered: 1 week ago