Question
This is a book study question to be used as a guide for other homework questions...I am only looking for the external funding requirement and
This is a book study question to be used as a guide for other homework questions...I am only looking for the external funding requirement and how to find it please
Pioneer Technologies is a manufacturer of medical equipment. The Year 1 financialstatements for the firm are shown below:
Balance Sheet as of December 31, Year 1(thousands of dollars)
Cash$100,000 Accounts payable $170,000
Receivables$190,000 Notes payable $78,000
Inventories$360,000 Accruals$110,000
Total current assets $650,000 Total current liabilities $358,000
Net fixed assets $710,000 Common stock $900,000
Retained earnings $102,000
Total assets$1,360,000 Total liabilities & equity$1,360,000
Income Statement for Year 1(thousands of dollars)
Sales$2,100,000
Operating costs$1,824,000
Earnings before interest and taxes $276,000
Interest$10,140
Earnings before taxes$265,860
Taxes (40%)$106,344
Net income$159,516
Dividends (60%)$95,710
Addition to retained earnings $63,806
Suppose that in Year 2, sales increase by 10 percent over Year 1 sales. Construct the pro forma financial statements using the constant growth method. Assume the firm operated at full capacityin Year 1.
I am having trouble figuring out the external funding requirement.
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