Question
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 | $ | 8 | Accounts payable | $ | 20 |
Accounts receivable | 23 | Accrued wages | 4 | ||
Inventory | 25 | Accrued taxes | 10 | ||
Current assets | $ | 56 | Current liabilities | $ | 34 |
Fixed assets | 44 | Notes payable | 14 | ||
Common stock | 18 | ||||
Retained earnings | 34 | ||||
Total assets | $ | 100 | Total liabilities and stockholders' equity | $ | 100
|
Owens has an aftertax profit margin of 7 percent and a dividend payout ratio of 45 percent.
If sales grow by 20 percent next year, determine how many dollars of new funds are needed to finance the growth
What is the New Funds?=
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