Question
The following information pertains to Cutler Company: Balance Sheet End of 2009 Cash 180,000 A/R 160,000 Inventory 110,000 Fixed Assets 300,000 Less Accumulated Depr. 200,000
The following information pertains to Cutler Company:
Balance Sheet
End of 2009
Cash 180,000
A/R 160,000
Inventory 110,000
Fixed Assets 300,000
Less Accumulated Depr. 200,000
Net Fixed Assets 100,000
Total Assets 550,000
Accounts Payable 50,000
Bonds Payable 100,000
Common Stock 100,000
Capital paid in excess of Par 75,000
Retained Earnings 225,000
Total Liabilities and
Stockholder's Equity 550,000
Income Statement
SALES $1,000,000
LESS COGS 400,000
GROSS PROFIT 600,000
LESS OPERATING EXPENSES 300,000
LESS DEPRECIATION EXPENSE 100,000
EBIT 200,000
LESS INTEREST EXPENSE 50,000
EBT 150,000
LESS TAXES 60,000
EAT $90,000
Assume that only current assets and current liabilities vary directly with sales. Cutler is expected to increase sales next year by $300,000. Assuming the profit margin is 9% and that the dividend payout ratio is 40%, how much new financing will Cutler need?
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