"S4-334-24. (Continued)Hickman AvionicsCash Payments Schedule April May June July Aug. Sept.Purchases $220,000 $210,000 $200,000 $250,000 $300,000 $220,000Payments (month afterpurchase—40%) 88,000 84,000 80,000 100,000 120,000Payments (secondmonth afterpurchase—60%) 132,000 126,000 120,000 150,000Labor Expense(10% of sales) 38,000 36,000 39,000 42,000Overhead 15,000 15,000 15,000 15,000Interest Payments 40,000 40,000Cash Dividend 20,000 Taxes 35,000 35,000Capital Outlay300,000Total Cash Payments $364,000 $257,000 $274,000 $702,000 S4-344-24. (Continued)Hickman AvionicsCash Budget June July August SeptemberCash Receipts $405,200 $392,400 $377,400 $371,400Cash Payments 364,000 257,000 274,000 702,000Net Cash Flow 41,200 135,400 103,400 (330,600)Beginning Cash Balance 20,000 50,000 50,000 50,000Cumulative Cash Balance 61,200 185,400 153,400 (280,600)Monthly Borrowing or (Repayment) -- -- -- *80,600Cumulative Loan Balance -- -- -- 80,600Marketable Securities Purchased 11,200 135,400 103,400 -- (Sold)-- -- 250,000Cumulative Marketable Securities 11,200 146,600 250,000 --Ending Cash Balance 50,000 50,000 50,000 50,000*Cumulative Marketable Sec. (Aug) $250,000Cumulative Cash Balance (Sept) –280,600Required (ending) Cash Balance 50,000Monthly Borrowing –$80,600 25. Carter Paint Company has plants in nine midwestern states. Sales for last year were $100million, and the balance sheet at year-end is similar in percentage of sales to that ofprevious years (and this will continue in the future). All assets (including fixed assets) andcurrent liabilities will vary directly with sales.BALANCE SHEET(in $ millions)Assets Liabilities and Stockholders’ EquityCash..................................... $5 Accounts payable ...................... $15Accounts receivable ............ 15 Accrued wages .......................... 6Inventory ............................. 30 Accrued taxes ............................4Current assets ................ 50 Current liabilities ...................... 25Fixed assets ......................... 40 Notes payable ............................ 30.Common stock .......................... 15.Retained earnings ...................... 20 Total liabilities and Total assets .......................... $90 stockholders’ equity ................ $90Carter Paint has an aftertax profit margin of 5 percent and a dividend payout ratio of30 percent.If sales grow by 10 percent next year, determine how many dollars of new funds areneeded to finance the expansion. (Assume Carter Paint is already using assets at fullcapacity and that plant must be added.)S4-35 4-25. Solution:Carter Paint CompanyAL Require New Funds = ?S- ?S- PS 1- D( ) ( ) ( ) 2 SS ?S = 10% $100mil.( ) ( ) ?S = $10,000,00090 25 RNF= $10,000,000 - $10,000,000 ( ) ( ) 100 100-- .05 $110,000,000 1 .30 ( ) ( ) = .90 $10,000,000-- .25 $10,000,000 .05 $110,000,000 .70 ( ) ( ) ( ) ( ) =$9,000,000-- $2,500,000 $3,850,000RNF=$2,650,000S4-36 26. Jordan Aluminum Supplies has the following financial statements, which are representativeof the company’s historical average.Income StatementSales ...................................................... $300,000Expenses ...............................................247,000Earnings before interest and taxes ........ $ 53,000Interest ..................................................3,000Earnings before taxes ............................ $ 50,000Taxes .....................................................20,000Earnings after taxes ............................... $ 30,000Dividends .............................................. $ 18,000Balance SheetAssets Liabilities and Stockholders’ EquityCash ........................ $ 8,000 Accounts payable ............. $6,000Accounts receivable20,000 Accrued wages ................. 2,000Inventory ................. 62,000 Accrued taxes ...................4,000 Current assets ... $ 90,000 Current liabilities ....... $12,000Fixed assets ............. 100,000 Notes payable ................... 10,000 Long-term debt................. 20,000 Common stock ................. 80,000 Retained earnings ............. 68,000 Total liabilities andTotal assets $190,000stockholders’ equity ...... $190,000Jordan is expecting a 20 percent increase in sales next year, and management isconcerned about the company’s need for external funds. The increase in sales is expectedto be carried out without any expansion of fixed assets, but rather through more efficientasset utilization in the existing stores. Among liabilities, only current liabilities varydirectly with sales.Using the percent-of-sales method, determine whether Jordan Aluminum has externalfinancing needs. (Hint: A profit margin and payout ratio must be found from the incomestatement.)S4-37 "