The 2017 financial statements for Growth Industries are presented below INCOME STATEMENT, 2017 Sales $ 210,000 Costs 155,000 EBIT $ 55,000 Interest expense 11,000 Taxable income $ 44,000 Taxes (at 35 ) 15,400 Net income $ 28,600 Dividends $ 14,300 Addition to retained earnings 14,300 BALANCE SHEET, YEAR END, 2017 Assets Liabilities Current assets Current liabilities Cash $ 4,000 Accounts payable $ 11,000 Accounts receivable 9,000 Total current liabilities $ 11,000 Inventories 27,000 Long term debt 110,000 Total current assets $ 40,000 Stockholders equity Net plant and equipment 150,000 Common stock plus additional paid in capital 15,000 Retained earnings 54,000 Total assets $ 190,000 Total liabilities and stockholders' equity $ 190,000 Sales and costs are projected to grow at 20 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 75 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 50 What is the required external financing over the next year (Negative amounts should be indicated by a minus sign ) The 2017 financlal statements for Growth Industries are presented below INCOME STATEMENT, 2817 Sales Costs EBIT Interest expense Taxable income Taxes (at 35 ) Net income $ 218,e80 155,888 $55,808 11,800 $ 44,988 15,480 $ 28,680 polnts 14,388 14,388 Dividends Addition to retained earnings Assets Liabilities Current assets Current liabilities $ 4,880 Cash Accounts receivable Inventories 9,808 278 Long term debt 48,88 Stockholders' equity Accounts payable Total current 1iabilities 11,800 $ 11,800 118,800 Total current assets 158 868Comon st $ 198,898 Total liabilities and stockholders equity Net plant and equipnent Conmon stock plus additional paid in capital Retained earnings 15,880 54,808 $ 198,808 Total assets Sales and costs are projected to grow at 20 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 75 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 dMdend payout ratlo of 0 50 What Is the requlred external financing over the next year (Negative amounts should be Indicated by a minus sign ) Answer is complete but not entirely correct External (17,925)

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Aug 27, 2024

The 2017 financial statements for Growth Industries are presented below. INCOME STATEMENT, 2017 Sales $ 210,000 Costs 155,000 EBIT $ 55,000 Interest expense 11,000 Taxable

The 2017 financial statements for Growth Industries are presented below.

INCOME STATEMENT, 2017
Sales			$	210,000
Costs				155,000
EBIT			$	55,000
Interest expense				11,000
Taxable income			$	44,000
Taxes (at 35%)				15,400
Net income			$	28,600
Dividends	$	14,300
Addition to retained earnings		14,300

BALANCE SHEET, YEAR-END, 2017
Assets			Liabilities
Current assets			Current liabilities
Cash	$	4,000	Accounts payable	$	11,000
Accounts receivable		9,000	Total current liabilities	$	11,000
Inventories		27,000	Long-term debt		110,000
Total current assets	$	40,000	Stockholders equity
Net plant and equipment		150,000	Common stock plus additional paid-in capital		15,000
			Retained earnings		54,000
Total assets	$	190,000	Total liabilities and stockholders' equity	$	190,000

Sales and costs are projected to grow at 20% 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 75% 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 0.50.

What is the required external financing over the next year? (Negative amounts should be indicated by a minus sign.)

image text in transcribed

The 2017 financlal statements for Growth Industries are presented below. INCOME STATEMENT, 2817 Sales Costs EBIT Interest expense Taxable income Taxes (at 35%) Net income $ 218,e80 155,888 $55,808 11,800 $ 44,988 15,480 $ 28,680 polnts 14,388 14,388 Dividends Addition to retained earnings Assets Liabilities Current assets Current liabilities $ 4,880 Cash Accounts receivable Inventories 9,808 278 Long-term debt 48,88 Stockholders' equity Accounts payable Total current 1iabilities 11,800 $ 11,800 118,800 Total current assets 158: 868Comon st $ 198,898 Total liabilities and stockholders equity Net plant and equipnent Conmon stock plus additional paid-in capital Retained earnings 15,880 54,808 $ 198,808 Total assets Sales and costs are projected to grow at 20% 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 75% 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 dMdend payout ratlo of 0.50. What Is the requlred external financing over the next year? (Negative amounts should be Indicated by a minus sign.) Answer is complete but not entirely correct. External (17,925)