How much external financing is needed

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1. Pharrell, Inc., has sales of $585,000, costs of $273,000, depreciation expense of $71,000, interest expense of $38,000, and a tax rate of 35 percent. What is the net income for this firm?

2. Hailey, Inc., has sales of $19,670, costs of $9,360, depreciation expense of $2,030, and interest expense of $1,520. Assume the tax rate is 30 percent. What is the operating cash flow, or OCF?

3. The profit margin is 20% and the retention ratio is 30%. Last year’s sales were $50 million and total assets were $40 million. None of the liabilities vary directly with sales, but assets and costs do.  If the sales growth rate is 20%, how much external financing is needed?

Reference no: EM131835027

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