Answered step by step
Verified Expert Solution
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
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
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started