Reference no: EM132467176
Use the following information to answer questions
Radical Edge Company has forecast a 20% sales growth for the next year. Current financials are shown below:
Income Statement
Sales 40,000,000
Costs 34,000,000
Taxable Income 6,000,000
Taxes 1,800,000
Net Income 4,200,000
Dividends 1,800,000
Addition to retained earnings 2,400,000
Balance Sheet
Assets
Current assets 8,000,000
Liabilities and Equity
Short-term debt 8,000,000
Long-term debt 6,000,000
Fixed assets 22,000,000
Common stock 4,000,000
Accumulated retained earnings 12,000,000
Total equity 16,000,000
Total assets 30,000,000
Total liabilities and equity 30,000,000
Calculate sustainable growth.
Construct pro-forma statements using the % of Sales Method (costs, all assets, and current liabilities rise with sales) assuming the dividend payout rate and the tax rate will stay the same. Calculate external financing, and answer the following questions accurate to $1.
- Using the information above for Radical Edge, the Net Income will be $
- Using the information above for Radical Edge, the Total Assets will be $
- Using the information above for Radical Edge, Accumulated Retained Earnings will be $
- Using the information above for Radical Edge, External Financing Needed will be $
- Using the information above for Radical Edge, the Sustainable Growth Rate is % (min 2 decimals).