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The most recent financial statements for Fleury Inc., follow. Sales for next year are projected to grow by 20 percent. Interest expense will remain constant;
The most recent financial statements for Fleury Inc., follow. Sales for next year are projected to grow by 20 percent. 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.
FLEURY, INC. | ||
Income Statement | ||
Sales | $ | 587,622 |
Costs | 509,434 | |
Other expenses | 14,167 | |
Earnings before interest and taxes | $ | ? |
Interest paid | 14,220 | |
Taxable income | $ | ? |
Taxes (30%) | ? | |
Net income | ? | |
Dividends | $ | 8,965 |
FLEURY, INC. | ||||||
Balance Sheet | ||||||
Assets | Liabilities and Owners Equity | |||||
Current assets | Current liabilities | |||||
Cash | $ | 22,718 | Accounts payable | $ | 59,292 | |
Accounts receivable | 39,474 | Notes payable | 19,530 | |||
Inventory | 72,336 | |||||
Long-term debt | $ | 103,705 | ||||
Fixed assets | ||||||
Net plant and equipment | $ | 423,737 | Owners equity | |||
Common stock and paid-in surplus | $ | 129,444 | ||||
Retained earnings | ? |
If the firm is operating at full capacity and no new debt or equity is issued, what external financing is needed to support the 20 percent growth rate in sales?
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