Reference no: EM132500783

The 2019 financial statements for Growth Industries are presented below.

INCOME STATEMENT, 2019

Sales $ 210,000

Costs 155,000

EBIT $ 55,000

Interest expense 11,000

Taxable income $ 44,000

Taxes (at 21%) 9,240

Net income $ 34,760

Dividend $ 17,380

Addition to retained earnings $ 17,380

BALANCE SHEET, YEAR-END, 2019

Assets Liabilities

Current assets Current liabilities

Cash $ 4,000 Accounts payable $ 11,000

Accounts receivable 9,000 Total current liabilities $ 11,000

Inventories 27,000 Long-term debt 110,000

Total current assets $ 40,000 Stockholders' equity

Net plant and equipment 150,000 Common stock plus additional 15,000

paid-in capital

Retained earnings 54,000

Total assets $190,000 Total liabilities plus stockholders' equity $ 190,000

Sales and costs are projected to grow at 20% a year for at least the next 4 years. Both current assets and accounts payable are projected to rise in proportion to sales. The firm is currently operating at 75% capacity, so it plans to increase fixed assets in proportion to sales. Interest expense will equal 10% of long-term debt outstanding at the start of the year. The firm will maintain a dividend payout ratio of 0.50.

What is the required external financing over the next year? (Enter excess cash as a negative number with a minus sign.)

External financing ___________________