Question
(trying again due the last chance the answer was not related to the question) The Optical Scam Company has forecast a sales growth rate of
(trying again due the last chance the answer was not related to the question)
The Optical Scam Company has forecast a sales growth rate of 25 percent for next year. Current assets, fixed assets, and short-term debt are proportional to sales. The current financial statements are shown here:
INCOME STATEMENT | ||
---|---|---|
Sales | $ 31,100,000 | |
Costs | 26,382,300 | |
Taxable income | $ 4,717,700 | |
Taxes | 1,651,195 | |
Net income | $ 3,066,505 | |
Dividends | $ 1,226,602 | |
Addition to retained earnings | 1,839,903 |
BALANCE SHEET | |||
---|---|---|---|
Assets | Liabilities and Equity | ||
Current assets | $ 7,270,000 | Short-term debt | $ 6,220,000 |
Fixed assets | 17,299,000 | Long-term debt | 4,354,000 |
Common stock | $ 2,516,000 | ||
Accumulated retained earnings | 11,479,000 | ||
Total equity | $ 13,995,000 | ||
Total assets | $ 24,569,000 | Total liabilities and equity | $ 24,569,000 |
a. Calculate the external funds needed for next year using the equation from the chapter.
Note: Do not round intermediate calculations.
b-1. Prepare the firms pro forma balance sheet for next year.
Note: Do not round intermediate calculations.
b-2. Calculate the external funds needed.
Note: Do not round intermediate calculations.
c. Calculate the sustainable growth rate for the company based on the current financial statements.
Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.
\begin{tabular}{|l|l|l|} \hline \multicolumn{2}{|c|}{ BALANCE SHEET } \\ \hline Assets & Short-term debt \\ \hline Current assets & Long-term debt \\ \hline Fixed assets & Common stock \\ \hline & Accumulated retained earnings \\ \hline & Total equity \\ \hline Total assets & Total liabilities and equity \\ \hline \end{tabular}
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