Question
The 2017 financial statements for Growth Industries are presented below. INCOME STATEMENT, 2017 Sales $ 310,000 Costs 205,000 EBIT $ 105,000 Interest expense 21,000 Taxable
The 2017 financial statements for Growth Industries are presented below.
INCOME STATEMENT, 2017
Sales $ 310,000
Costs 205,000
EBIT $ 105,000
Interest expense 21,000
Taxable income $ 84,000
Taxes (at 35%) 29,400
Net income $ 54,600
Dividends $ 21,840
Addition to retained earnings 32,760
BALANCE SHEET, YEAR-END, 2017
Assets
Current assets
cash 7,000
accounts receivable 12,000
inventories 31,000
total current assets 50,000
net plant and equipments 250,000
total assets 300,000
liabilities
current liabilities
accounts payable 14,000
total current liabilities 14,000
long term debt 210,000
stockholders equity
common stock plus addition paid in capital 15,000
retained earnings 61,000
total liabilities and stockholders equity 300,000
Sales and costs are projected to grow at 40% a year for at least the next 4 years. Both current assets and accounts payable are projected to rise in proportion to sales. The firm is currently operating at 70% capacity, so it plans to increase fixed assets in proportion to sales. Interest expense will equal 10% of long-term debt outstanding at the start of the year. The firm will maintain a dividend payout ratio of 0.40. What is the required external financing over the next year?
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Measuring And Managing Credit Risk Quantitative Approach For Default Risk Data Analysis And Models For Loss Distributions Unique Strategies For Back Capital Allocation And Saucerization
Authors: Arnaud De Servigny , Olivier Renault
1st Edition
0071417559,007178800X
