Question
tables below are latest statement of comprehensive income and statement of financial position of ABC Inc Statement of Comp. Income Sales 6,000 Costs 3,000 EBT
tables below are latest statement of comprehensive income and statement of financial position of ABC Inc
Statement of Comp. Income | ||
Sales | 6,000 | |
Costs | 3,000 | |
EBT | 3,000 | |
Taxes (40%) | 1,200 | |
Net Income | 1,800 | |
Dividends | 1,200 | |
Add. To RE | 600 |
Statement of Financial Position | ||||
Recent | Recent | |||
ASSETS | LIABILITIES & OWNERS EQUITY | |||
Current Assets | Current Liabilities | |||
Cash | 1,000 | A/P | 1,000 | |
Acc./Receiv. | 2,000 | Notes/Pay. | 3,000 | |
Inventory | 3,000 | Total | 4,000 | |
Total | 6,000 | LT Debt | 2,000 | |
Fixed Assets | Owners Equity | |||
Net PP&E | 6,000 | Com Shares | 2900 | |
Total Assets | 12,000 | RE | 3,100 | |
Total | 6,000 | |||
Total L & OE | 12000 | |||
a) make pro forma statements for the next year based on growth rate of 15%.define the external financing needed? Assume the plan is to keep the retention rate constant, and investment on new assets is 15% of total assets. b) What are the internal growth rate and the sustainable growth rate? c) How much external financing is needed if the plan is to keep the debt to equity ratio constant? (with a sales growth projection of 15%) Whats the new retention rate? d) Calculate the maximum achievable growth rate if the company is allowed to borrow up to $2000 (new debt). Calculate the maximum achievable growth rate if the company can borrow up to $2000 but has to pay at least a 20% dividend (maximum retention rate of 80%).
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