Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The most recent financial statements for Bearcat Machine, Inc., are shown below. Bearcat Machine, INC. 2020 Income Statement Sales Costs Other expenses Earnings before interest

image text in transcribed

The most recent financial statements for Bearcat Machine, Inc., are shown below. Bearcat Machine, INC. 2020 Income Statement Sales Costs Other expenses Earnings before interest and taxes Interest paid Taxable income Taxes (21%) Net income Dividend Addition to retained earnings $683,520 567,240 17,320 $98,960 15,780 $83,180 17,468 65,712 22,719 42,993 Current assets Cash Account receivable Inventory Total Bearcat Machine, INC. Balance Sheet as of December 31, 2020 Current liabilities $20,654 Accounts payable 29,718 Notes payable 70,966 Total $121,338 Long-term debt Owners' equity Common stock and paid-in surplus $337,320 Accumulated retained earrings Total $458,658 Total liabilities and owners' equity $55,080 13,776 $68,856 $127,000 Fixed asset Net plant and equipment $105,000 157,802 $262,802 $458,658 Total Asset Sales for 2021 are projected to grow by 20%. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales. If the firm is operating at full capacity and no new debt or equity is issued, what is the external financing needed to support to the 20 percent growth rate

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Markets And Institutions

Authors: Frederic S. Mishkin, Stanley G. Eakins

7th Edition

013213683X, 978-0132136839

More Books

Students also viewed these Finance questions