Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The most recent financial statements for Crosby, Incorporated, appear below. Sales for 2 0 2 2 are projected to grow by 3 0 percent. Interest

The most recent financial statements for Crosby, Incorporated, appear below. Sales for 2022 are projected to grow by 30 percent. Interest expense will remain constant; the tax rate and the dividend payout rate also will remain constant. Costs, other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales.
CROSBY, INCORPORATED
2021 Income Statement
Sales $ 749,000
Costs 584,000
Other expenses 20,000
Earnings before interest and taxes $ 145,000
Interest expense 16,000
Taxable income $ 129,000
Taxes (21%)27,090
Net income $ 101,910
Dividends $ 31,592
Addition to retained earnings 70,318
CROSBY, INCORPORATED
Balance Sheet as of December 31,2021
Assets Liabilities and Owners Equity
Current assets Current liabilities
Cash $ 20,840 Accounts payable $ 55,000
Accounts receivable 43,780 Notes payable 14,200
Inventory 93,960 Total $ 69,200
Total $ 158,580 Long-term debt $ 132,000
Fixed assets Owners equity
Net plant and equipment $ 425,000 Common stock and paid-in surplus $ 115,500
Retained earnings 266,880
Total $ 382,380
Total assets 583,580 Total liabilities and owners equity $ 583,580
If the firm is operating at full capacity and no new debt or equity is issued, what external financing is needed to support the 30 percent growth rate in sales?

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

Investment Risk Management

Authors: Yen Yee Chong

1st Edition

0470849517, 9780470849514

More Books

Students also viewed these Finance questions