All other ratios-including dividend payout ratio

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Reference no: EM13848396

Upton Computers makes bulk purchases of small computers, stocks them in conveniently located warehouses, and ships them to its chain of retail stores. Upton’s balance sheet as of December 31, 2013 is shown here (in millions of dollars):

Cash $ 3.5 Accounts Payable $ 9.0 Accounts Receivable 26.0 Notes Payable 18.0 Inventories 58.0 Accruals 8.5 Total Current Assets $ 87.5 Total Current Liabilities $ 35.5

Net Fixed Assets 35.0 Mortgage Loan 6.0 Common Stock 15.0 . Retained Earnings 66.0 Total Assets $ 122.5 Total Liabs & Equity $122.5

Sales for 2013 were $350 million, while net income for the year was $10.5 million. Upton paid dividends of $4.2 million to common stockholders. The firm is operating at full capacity. During 2014:

a. Sales are projected to increase by $70 million.

b. They have an average tax rate of 35%.

c. Average Days Sales Outstanding is projected at 30 days.

d. Gross Margin (Sales - COGS) will average 35%, while inventory turns will improve to 5 times.

e. The current Mortgage Loan will be reduced by $2 million.

f. All other ratios, including the dividend payout ratio, will remain constant.

Construct a projected Balance Sheet and Income Statement for the year-ended 12/31/2014.

Reference no: EM13848396

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