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The following is the financial statement of Executive Dynamic Mattress for the year ended December 2018. Refer Table 18.2 INCOME STATEMENT, 2018 Revenue $ 3,100.0
The following is the financial statement of Executive Dynamic Mattress for the year ended December 2018. Refer Table 18.2
INCOME STATEMENT, 2018 | |||
Revenue | $ | 3,100.0 | |
Cost of goods sold | 2,790.0 | ||
Depreciation | 22.9 | ||
EBIT | $ | 287.1 | |
Interest expense | 5.7 | ||
Earnings before taxes | $ | 281.4 | |
Taxes (50% of 6) | 140.7 | ||
Net income | $ | 140.7 | |
Dividends | 95.0 | ||
Reinvested earnings | $ | 45.7 | |
Operating cash flow | $ | 163.6 | |
BALANCE SHEET, YEAR-END | ||||||||||||||||
2017 | 2018 | |||||||||||||||
Assets | ||||||||||||||||
Net working capital | $ | 226.0 | $ | 341.0 | ||||||||||||
Fixed assets | 381.0 | 387.5 | ||||||||||||||
Total net assets | $ | 607.0 | $ | 728.5 | ||||||||||||
Liabilities and Shareholders Equity | ||||||||||||||||
Long-term debt | $ | 57.0 | $ | 132.8 | ||||||||||||
Shareholders equity | 550.0 | 595.7 | ||||||||||||||
Total liabilities and shareholders equity | $ | 607.0 | $ | 728.5 | ||||||||||||
BALANCE SHEET, YEAR-END | ||||||||
2018 | ||||||||
Sources and Uses of Funds | ||||||||
Operating cash flow | $ | 163.6 | ||||||
Increase in working capital | 115.0 | |||||||
Investments in fixed assets | 29.4 | |||||||
Dividends | 95.0 | |||||||
Total uses of cash | 239.4 | |||||||
Required external capital | 75.8 | |||||||
Financial Ratios | ||||||||
Debt ratio | 0.2 | |||||||
Interest coverage | 50.4 | |||||||
Use the revised model to generate a new financial plan for 2021. How would its financial plan change if the dividend payout ratio were cut to 30%? What would be required external financing? (Input all amounts as positive values. Do not round intermediate calculations. Round "Debt ratio" to 2 decimal places and other answers to 1 decimal place.)
Sources and Uses of Funds Operating cash flow Increase in working capital Investments in fixed assets Dividends Total uses of cash Required external financing Financial Ratios Debt ratio Interest coverage Income Statement 2017 2018 2019 2020 2021 2022 3,100.0 2,790.0 22.9 Revenue Cost of goods sold Depreciation EBIT Interest expense Earnings before taxes Taxes at 50% 287.1 5.7 281.4 140.7 Net income 140.7 Dividends 95.0 Reinvested earnings 45.7 Balance Sheet (year-end) Assets Net working capital Net fixed assets Total assets Liabilities and equity Long-term debt Shareholders' equity Total liab. & share. equity Sources and Uses of Funds Operating cash flow Increase in working capital Investments in fixed assets Dividends Total uses of cash Required external financing Financial Ratios Debt ratio Interest coverage Income Statement 2017 2018 2019 2020 2021 2022 3,100.0 2,790.0 22.9 Revenue Cost of goods sold Depreciation EBIT Interest expense Earnings before taxes Taxes at 50% 287.1 5.7 281.4 140.7 Net income 140.7 Dividends 95.0 Reinvested earnings 45.7 Balance Sheet (year-end) Assets Net working capital Net fixed assets Total assets Liabilities and equity Long-term debt Shareholders' equity Total liab. & share. equity
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