Question

The most recent financial statements for Fleury, Inc., follow. Sales for 2012 are projected to grow...

The most recent financial statements for Fleury, Inc., follow. Sales for 2012 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. 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?

Fleury Inc.

2011 Income Statement

Sales

743,000

Costs

578,000

Other expenses

15,200

Earning before interest and taxes

149,800

Interest paid

11,200

Taxable Income

138,600

Taxes

48,510

Net Income

90,090

Dividends

27,027

Additions to retained earnings

63,063

Fleury Inc.

Balance Sheet as of December 31, 2011

Assets

Amount

Liabilities

Amount

Current Assets

Current liabilities

Cash

          20,240  

Accounts payable

          54,400  

Accounts receivables

          32,560  

Notes payable

          13,600  

Inventory

          69,520  

Total

          68,000  

Total

        122,320  

Fixed Assets

Long term debt

        126,000  

Net plant and equipment

        330,400  

Owner's equity

Common stock and paid-in surplus

        112,000  

Retained earnings

        146,720  

Total

        258,720  

Total assets

        452,720  

Total liabilities and shareholder's equity

        452,720  

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