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The 2019 financial statements for Growth Industries are presented below. INCOME STATEMENT, 2019 Sales S 400,000 Costs 250,000 EBIT S 150,000 Interest expense 30,000 Taxable
The 2019 financial statements for Growth Industries are presented below. INCOME STATEMENT, 2019 Sales S 400,000 Costs 250,000 EBIT S 150,000 Interest expense 30,000 Taxable income $ 120,000 Taxes (at 21%} 25,200 Net income $ 94,800 Dividends $ 47,400 Addition to retained earnings S 47,400 BALANCE SHEET, YEAREND, 2019 Assets Liabilities Current assets Current liabilities Cash 5 9,000 Accounts payable $ 16,000 Accounts receivable 14,000 Total current liabilities $ 16,000 Inventories 27,000 Longterm debt 300,000 Total current assets $ 50,000 Stockholders' equity Net plant and equipment 340,000 Common stock plus additional paidin capital 15,000 Retained earnings 59,000 Total assets $ 390.000 Total liabilities plus stockholders' equity $ 390,000 Sales and costs are projected to grow at 30% 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 longeterm 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? (Enter excess cash as a negative number with a minus sign.)
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