Reference no: EM132484124
The most recent financial statements for Crosby, Inc., follow. Sales for 2018 are projected to grow by 20 percent. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales.
CROSBY, INC.
2017 Income Statement
Sales $744,000 Costs 579,000 Other expenses 15,000 Earnings before interest and taxes $150,000 Interest paid 11,000 Taxable income $139,000 Taxes (21%) 29,190 Net income $109,810 Dividends$32,943 Addition to retained earnings 76,867
CROSBY, INC.
Balance Sheet as of December 31, 2017Assets Liabilities and Owners' Equity Current assets Current liabilities
Cash$20,340 Accounts payable$54,500
Accounts receivable 43,280 NotesPayable 13,700
Inventory 88,960 Total$68,200
Total$152,580 Long-term debt$127,000
Fixed assets Owners' equity
Net plant and equipment$420,000 Common stock paid in surplus $113000
Total $377380
Total Assets $572,580 Total liabilities and owners' equity$572,580
If the firm is operating at full capacity and no new debt or equity is issued, what external financing is needed to support the 20 percent growth rate in sales? (Do not round intermediate calculations.)