Question

Lando Company is planning on a 20% increase in sales volume next year. This year’s sales...

Lando Company is planning on a 20% increase in sales volume next year. This year’s sales revenue is $3,435,000 and its year-end balance sheet shows total current assets of $830,000, total plant assets of $1,670,000, and total current liabilities of $450,000. The company’s dividend payout ratio is 40% and its profit margin is expected to remain steady at 14%. The company is presently operating at full capacity so it estimates that it will need to purchase $300,000 of additional plant assets to accommodate the increased sales volume.

Required:

A.   Compute next year’s expected net increase in retained earnings.

B.   Using the percentage-of-sales method, compute the required new funds to facilitate the 20% increase in sales volume.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Answer is given below

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Sybil Inc. had sales of $1,600,000 last year. The company has shown a steady profit margin...
Sybil Inc. had sales of $1,600,000 last year. The company has shown a steady profit margin of 16% over the last few years and has a consistent dividend payout of 60%. Both of these ratios are not expected to change in future years. The balance sheet for the year just ended is provided: Sybil Inc. Balance Sheet As at December 31, 2017 Cash 50,000 Accounts receivable 130,000 Prepaid expenses 170,000     Total current assets 350,000 Property, plant and equipment (net)...
Antivirus Inc. expects its sales next year to be $3,300,000. Inventory and accounts receivable will increase...
Antivirus Inc. expects its sales next year to be $3,300,000. Inventory and accounts receivable will increase by $560,000 to accommodate this sales level. The company has a steady profit margin of 8 percent with a 15 percent dividend payout. How much external financing will the firm have to seek? Assume there is no increase in liabilities other than that which will occur with the external financing.
Antivirus Inc. expects its sales next year to be $3,600,000. Inventory and accounts receivable will increase...
Antivirus Inc. expects its sales next year to be $3,600,000. Inventory and accounts receivable will increase by $590,000 to accommodate this sales level. The company has a steady profit margin of 12 percent with a 30 percent dividend payout. How much external financing will the firm have to seek? Assume there is no increase in liabilities other than that which will occur with the external financing. What are the external funds needed _______________
Suppose Mariposa, Inc.’s Sales are projected to grow by 20% next year. It has total assets...
Suppose Mariposa, Inc.’s Sales are projected to grow by 20% next year. It has total assets that grow proportionately with sales. Current total assets are $2 million and current total sales are $1 million. The only liabilities that change with sales are accounts payable, which are currently $300,000. The profit margin and dividend payout ratio are constant. The profit margin is 15 percent and the dividend payout ratio is 60 percent. Using the “percent of sales” approach, answer the following...
Mayor company sales are expected to increase by 20% from $5 million in 2018 to $6...
Mayor company sales are expected to increase by 20% from $5 million in 2018 to $6 million in 2019. Its assets totaled $7 million at the end of 2018. Mayor is already at full capacity, so its assets must grow at the same rate as projected sales. At the end of 2018, current liabilities were $1.2 million, consisting of $500,000 of accounts payable, $300,000 of notes payable, and $400,000 of accruals. The after-tax profit margin is forecasted to be 5%,...
A company’s sales last year were $50000 and it operated at full capacity. Its sales this...
A company’s sales last year were $50000 and it operated at full capacity. Its sales this year are expected to increase by 20%. The company needs $0.5 of assets per dollar of sales to operate and its current liabilities are $0.05 per dollar of sales. The company’s profit margin is 3% and its dividend payout ratio is 30%. What amount of additional funds does the company need to support this year’s projected sales?
This year’s sales for XYZ Co. were $22 million. Sales are expected to increase by 5%...
This year’s sales for XYZ Co. were $22 million. Sales are expected to increase by 5% next year. Historically, the firm’s net profit margin has been 7% and its P/E at 15. The firm maintains a 25% dividend payout ratio. The stock is currently at $112 and there are 165,000 shares outstanding. Calculate the expected EPS, DPS and stock price for next year. If you bought the stock today and sold it one year at the expected price, calculate your...
This year’s sales for XYZ Co. were $22 million. Sales are expected to increase by 5%...
This year’s sales for XYZ Co. were $22 million. Sales are expected to increase by 5% next year. Historically, the firm’s net profit margin has been 7% and its P/E at 15. The firm maintains a 25% dividend payout ratio. The stock is currently at $112 and there are 165,000 shares outstanding. Calculate the expected EPS, DPS and stock price for next year. If you bought the stock today and sold it one year at the expected price, calculate your...
An investor in Amman, Jordan, estimates that next year’s sales for Amman Intercontinental Hotels, Inc. would...
An investor in Amman, Jordan, estimates that next year’s sales for Amman Intercontinental Hotels, Inc. would amount to about 150 million Jordanian dinar. The company has 10 million shares outstanding, generates a net profit margin of about 15%, and has a payout ratio of 40%. All figures are expected to hold for next year. Given this information, compute the following. A. Estimated net earnings for next year b. Next year’s dividends per share c. The expected price of the stock...
1.Broussard Skateboard's sales are expected to increase by 20% from $8.6 million in 2019 to $10.32...
1.Broussard Skateboard's sales are expected to increase by 20% from $8.6 million in 2019 to $10.32 million in 2020. Its assets totaled $3 million at the end of 2019. Broussard is already at full capacity, so its assets must grow at the same rate as projected sales. At the end of 2019, current liabilities were $1.4 million, consisting of $450,000 of accounts payable, $500,000 of notes payable, and $450,000 of accruals. The after-tax profit margin is forecasted to be 3%,...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT