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Morrissey Technologles Inc.'s 2019 financial statements are shown here. Morrissey Technologies Inc.: Balance Sheet as of December 31, 2019 Cash $180,000 Accounts payable $360,000 Receivables 360,000 Notes payable 56,000 Inventories 720,000 Accrued liabilities 180,000 Total current assets $1,260,000 Total current liabilities $596,000 Long-term debt 100,000 Fixed assets 1,440,000 Common stock 1,800,000 Retained earnings 204,000 Total assets $2,700,000 $2,700,000 Total liabilities and equity Morrissey Technologies Inc.: Income Statement for December 31, 2019 Sales $3,600,000 Operating costs including 3,279,720 depreciation EBIT $320,280 Interest 20,280 EBT $300,000 Taxes (25%) 75,000 Net Income $225,000 Per Share Data: Common stock price $45.00 Earnings per share (EPS) $2.25 Dividends per share (OPS) 51.35 Suppose that in 2020, sales increase by 20% over 2019 sales. The firm currently has 100,000 Miasta Per Share Data: Common stock price $45.00 Earnings per share (EPS) $2.25 Dividends per share (DPS) $1.35 Suppose that in 2020, sales Increase by 20% over 2019 sales. The firm currently has 100,000 shares outstanding. It expects to maintain its 2019 dividend payout ratio and believes that its assets should grow same rate as sales. The firm has no excess capacity. However, the firm would like to reduce its operating costs/sales ratio to 86.5% and increase its total liabilities-to-assets ratio to 30%. (It believes its liabilities-t assets ratio currently is too low relative to the industry average.) The firm will raine 30% of the 2020 foreca Interest-bearing debt as notes payable, and it will issue long-term bonds for the remainder. The firm forecas that its before-tax cost of debt (which includes both short and long-term debt) is 12.5%. Assume that any common stock issuances or repurchases can be made at the firm's current stock price of $45. a. Construct the forecasted financial statements assuming that these changes are made. What are the firm's forecasted notes payable and long-term debt balances? What is the forecasted addition to retained earnin Do not round intermediate calculations. Round your answers to the nearest cent. 2019 Sales Morrissey Technologies Inc. Pro Forma Income Statement December 31, 2020 2020 $3,600,000 $ Operating costs (includes depreciation) 3,279,720 EBIT $320,280 $ Interest expense 20,280 EBT $300,000 $ Taxes (259) 75,000 Net Income $225,000 $ Dividends (60%) $ Addition to retained earnings $ Morrissey Technologies Inc. Pro Forma Balance Statement December 31, 2020 2019 2020 A MacBook Air ADOIDON to retained barrings Morrissey Technologles Inc. Pro Forma Balance Statement December 31, 2020 2019 2020 Assets Cash $180,000 Accounts receivable 360,000 Inventories 720,000 Foxed assets 1,440,000 Totalsts $2,700,000 Liabilities and Equity Payables + acciais $540,000 Short-term bank loans 56,000 Total current liabilities $596.000 + Long-term bonds 100,000 Total liabili 5696,000 $ Common stock 1,800.000 Retained warnings 204,000 Total common equity $2,004,000 $ Total abilities and equity $2,700,000 $ b. the profit margin remains at 6.25 and the dividend payout ratio remains at 60, at what growth rater in sales with additional financing requirements be exactly zero in other words, what the firm's sustainable growth rate? On Set A Neal to zero and solve for 9-) De not und intermediate calculations. Round your answer to the decimal places Check My Work MacBook Air Morrissey Technologies Inc.'s 2019 financial statements are shown here Morrissey Technologies Inc.: Balance Sheet as of December 31, 2019 $180,000 Accounts payable $360,000 Receivables 360,000 Notes payable 56,000 Inventories 720,000 Accrued abilities 180,000 Total current sets $1,200,000 Total current abates 1596.000 Long-term debe 100,000 ed assets 1.440,000 Common stock 1.800,000 tindings 204,000 TO $2,700,000 Total bites and 1.700.000 ut Morrissey Technologies Inc: Income Statement for December 31, 2019 Sale 12,000,000 Operating costsing 3279,720 depreciation 12,20 Interest 20,280 ET 300,000 Taye (25) 75,000 Net Income 2.000 Per Share Data Commons 545,00 Earrings er the CE 22:25 Divendres 13 Suppo 2020 20% wwer 2019 The firm 100.000 ding, the Mehr ere. The firm the per la cure MacBook AS 80 DOR od 3 4 7 8 9 6 $ - (Di 2019 23,600,000 Sales 20000 3,279.720 3705300 Operating costs (includes relation) ERIT 320200 614700 5085 03 Interested 20.20 EAT 1 5300.000 75.000 3 Takes (253 Net Income $225.000 13 Dios (60) Addition to mained Morrissey Technologies Inc. Pre Forma Balance Statement December 31, 2020 2019 Ames C 000 Account 000 veterie 799.000 O MacBook Air 21 41 EVE dad 30 13 60 O 5 00 3 6 $ 7 9 0 E 0 P R Y T Morrissey Technologies Inc. Pro Forma Balance Statement December 31, 2020 2019 2020 Assets Cash $180,000 Accounts receivable 360,000 Inventories 720,000 Fixed assets 1,440,000 Total assets $2,700,000 Labities and Equity Payables + accruals $540,000 $ Short-term bank loans 56,000 83 Total current liabilities $ $596,000 100,000 $696,000 3 3 3 3 3 3 Long-term bonds Total liabilities 1 Common stock 1,800,000 Retained earnings 204,000 Total common equity $2,004,000 $ Total abilities and equity $2,700,000 b. If the profit margin remains at 6.25% and the dividend payout ratio remains at 60%, at what growth rate in sales will the additional financing requirements be exactly zero in other words, what is the firm's sustainable growth rate? (Hinti Set AFN equal to zero and solve for o.) Do not round intermediate calculations. Round your answer to two decimal places Morrissey Technologies Inc.'s 2019 financial statements are shown here. Morrissey Technologies Inc.: Balance Sheet as of December 31, 2019 Cash $180,000 Accounts payable $360,000 Receivables 360,000 Notes payable 56,000 Inventories 720,000 Accrued liabilities 180,000 Total current assets $1,260,000 Total current liabilities $596,000 Long-term debt 100,000 Fixed assets 1,440,000 Common stock 1,800,000 Retained earnings 204,000 Total assets $2,700,000 Total liabilities and $2,700,000 equity Morrissey Technologies Inc.: Income Statement for December 31, 2019 Sales $3,600,000 Operating costs including 3,279,720 depreciation EBIT $320,280 Interest 20,280 ET nnnnn ent ror December Sales $3,600,000 3,279,720 Operating costs including depreciation EBIT Interest EBT Taxes (25%) Net Income $320,280 20,280 $300,000 75,000 $225,000 Per Share Data: Common stock price $45.00 Earnings per share (EPS) $2.25 Dividends per share (OPS) $1.35 Suppose that in 2020, sales increase by 20% over 2019 sales. The firm currently has 100,000 shares outstanding. It expects to maintain payout ratio and believes that its assets should grow at the same rate as sales. The firm has no excess capacity. However, the firm would operating costs/sales ratio to 86.5% and increase its total liabilities to assets ratio to 30%. (It believes its liabilities to assets ratio curre MacBook Air DOO 80, GOD F4 F6 FO F5 FB 9 F3 F7 3 4 5 9 6 $ 7 8 ! 0 11 Morrissey Technologies Inc. Pro Forma Income Statement December 31, 2020 2019 2029 Sales $3,600,000 4320000 Operating costs (Includes depreciation) 3,279,720 3705300 $320,280 614700 Interest expense 20,280 50895 EBIT EBT $ $300,000 75,000 3 3 3 3 3 3 3 Taxes (25%) Net Income $225,000 Dividends (60%) $ Addition to retained earnings Morrissey Technologies Inc. Pro Forma Balance Statement December 31, 2020
