Question

The most recent financial statements for Assouad, Inc., are shown here: Income Statement Balance Sheet   Sales...

The most recent financial statements for Assouad, Inc., are shown here:

Income Statement Balance Sheet
  Sales $ 9,100 Current assets $ 3,900 Current liabilities $ 2,550
  Costs 6,400 Fixed assets 9,200 Long-term debt 4,120
  Taxable income $ 2,700 Equity 6,430
  Taxes (24%) 648   Total $ 13,100   Total $ 13,100
    Net income $ 2,052

Assets, costs, and current liabilities are proportional to sales. Long-term debt and equity are not. The company maintains a constant 45 percent dividend payout ratio. As with every other firm in its industry, next year’s sales are projected to increase by exactly 16 percent.

What is the external financing needed? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Homework Answers

Answer #1

External financing needed = $378.82

Explanation;

External financing needed = Increase in assets – Increase in current liabilities – Increase in retained earnings

Projected Income Statement

Sales ($9100 * 1.16)

$10556

Costs ($6400 * 1.16)

$7424

Taxable income

$3132

Taxes

$751.68

Net income

$2380.32

Dividends ($2380.32 *0.45)

$1071.14

Retained earnings

$1309.18

Increase in assets ($13100 * 0.16) = $2096

Increase in current liabilities ($2550 * 0.16) = $408

Hence, external financing needed = $2096 – $408 – $1309.18

= $378.82

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
The most recent financial statements for Assouad, Inc., are shown here:   Income Statement Balance Sheet   Sales...
The most recent financial statements for Assouad, Inc., are shown here:   Income Statement Balance Sheet   Sales $3,900     Current assets $3,500     Current liabilities $960     Costs 2,000     Fixed assets 5,800     Long-term debt 3,490     Taxable income $1,900     Equity 4,850     Taxes (24%) 456       Total $9,300       Total $9,300       Net income $1,444   Assets, costs, and current liabilities are proportional to sales. Long-term debt and equity are not. The company maintains a constant 50 percent dividend payout ratio. As with every other firm in its industry, next...
The most recent financial statements for Assouad, Inc., are shown here: Income Statement Balance Sheet   Sales...
The most recent financial statements for Assouad, Inc., are shown here: Income Statement Balance Sheet   Sales $ 9,300 Current assets $ 4,050 Current liabilities $ 2,625   Costs 6,550 Fixed assets 9,300 Long-term debt 4,190   Taxable income $ 2,750 Equity 6,535   Taxes (22%) 605   Total $ 13,350   Total $ 13,350     Net income $ 2,145 Assets, costs, and current liabilities are proportional to sales. Long-term debt and equity are not. The company maintains a constant 44 percent dividend payout ratio. As with...
The most recent financial statements for Assouad, Inc., are shown here: Income Statement Balance Sheet Sales...
The most recent financial statements for Assouad, Inc., are shown here: Income Statement Balance Sheet Sales $ 10,900 Current assets $ 5,250 Current liabilities $ 3,225 Costs 7,750 Fixed assets 10,100 Long-term debt 4,750 Taxable income $ 3,150 Equity 7,375 Taxes (22%) 693 Total $ 15,350 Total $ 15,350 Net income $ 2,457 Assets, costs, and current liabilities are proportional to sales. Long-term debt and equity are not. The company maintains a constant 35 percent dividend payout ratio. As with...
The most recent financial statements for Assouad, Inc., are shown here: Income Statement Balance Sheet Sales...
The most recent financial statements for Assouad, Inc., are shown here: Income Statement Balance Sheet Sales $ 10,900 Current assets $ 5,250 Current liabilities $ 3,225 Costs 7,750 Fixed assets 10,100 Long-term debt 4,750 Taxable income $ 3,150 Equity 7,375 Taxes (22%) 693 Total $ 15,350 Total $ 15,350 Net income $ 2,457 Assets, costs, and current liabilities are proportional to sales. Long-term debt and equity are not. The company maintains a constant 35 percent dividend payout ratio. As with...
The most recent financial statements for Assouad, Inc., are shown here: Income Statement Balance Sheet   Sales...
The most recent financial statements for Assouad, Inc., are shown here: Income Statement Balance Sheet   Sales $ 11,100 Current assets $ 5,400 Current liabilities $ 3,300   Costs 7,900 Fixed assets 10,200 Long-term debt 4,820   Taxable income $ 3,200 Equity 7,480   Taxes (24%) 768   Total $ 15,600   Total $ 15,600     Net income $ 2,432 Assets, costs, and current liabilities are proportional to sales. Long-term debt and equity are not. The company maintains a constant 40 percent dividend payout ratio. As with...
The most recent financial statements for Xporter, Inc., are shown here: Income Statement Sales $7272 Costs...
The most recent financial statements for Xporter, Inc., are shown here: Income Statement Sales $7272 Costs $5543 Taxable Income ? Taxes (34%) ? Net Income ? Balance Sheet Current Asset $3922 Current Liabilities $2359 Fixed Asset $9835 Long Term Debt $3897 Equity ? Assets, costs, and current liabilities are proportional to sales. Long-term debt and equity are not. The company maintains a constant 15 percent dividend payout ratio. As with every other firm in its industry, next year’s sales are...
The most recent financial statements for Summer Tyme, Inc., are shown here:   Income Statement Balance Sheet...
The most recent financial statements for Summer Tyme, Inc., are shown here:   Income Statement Balance Sheet   Sales $4,000     Current assets $5,300     Current liabilities $790     Costs 1,800     Fixed assets 6,000     Long-term debt 3,570     Taxable income $2,200     Equity 6,940     Taxes (34%) 748       Total $11,300       Total $11,300       Net income $1,452   Assets, costs, and current liabilities are proportional to sales. Long-term debt and equity are not. The company maintains a constant 40 percent dividend payout ratio. As with every other firm in its industry,...
The most recent financial statements for Xporter, Inc., are shown here: Income Statement Sales $7098 Costs...
The most recent financial statements for Xporter, Inc., are shown here: Income Statement Sales $7098 Costs $5920 Taxable Income ? Taxes (34%) ? Net Income ? Balance Sheet Current Asset $3800 Current Liabilities $2107 Fixed Asset $9822 Long Term Debt $3955 Equity ? Assets, costs, and current liabilities are proportional to sales. Long-term debt and equity are not. The company maintains a constant 22 percent dividend payout ratio. As with every other firm in its industry, next year’s sales are...
Question 2 The most recent financial statements for Summer Tyme, Inc., are shown here:   Income Statement...
Question 2 The most recent financial statements for Summer Tyme, Inc., are shown here:   Income Statement Balance Sheet   Sales $3,700     Current assets $3,900     Current liabilities $910     Costs 2,300     Fixed assets 5,800     Long-term debt 3,570     Taxable income $1,400     Equity 5,220     Taxes (31%) 434       Total $9,700       Total $9,700       Net income $966   Assets, costs, and current liabilities are proportional to sales. Long-term debt and equity are not. The company maintains a constant 60 percent dividend payout ratio. As with every other firm in...
The most recent financial statements for Hailey Co. are shown here: Income Statement Balance Sheet Sales...
The most recent financial statements for Hailey Co. are shown here: Income Statement Balance Sheet Sales $ 51,600 Current assets $ 27,600 Long-term debt $ 60,200 Costs 24,000 Fixed assets 121,000 Equity 88,400 Taxable income $ 27,600 Total $ 148,600 Total $ 148,600 Taxes (22%) 6,072 Net income $ 21,528 Assets and costs are proportional to sales. The company maintains a constant 30 percent dividend payout ratio and a constant debt-equity ratio. What is the maximum increase in sales that...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT