Solution-What is the required external financing over the

What is the required external financing over the next year

Reference no: EM132465471

The 2019 financial statements for Growth Industries are presented below.

INCOME STATEMENT,	2019
Sales	$ 230,000
Costs	165,000
EMT	$ 65,000
Interest expense	13,000
Taxable income	$ 52,000
Taxes (at 21%)	10 ,920
Net income	$ 41,080
Dividends Addition to retained earnings		$ 16,432
		$ 24,648

BALANCE SHEET, YEAR-END, 2019
Assets Current assets		Liabilities Current liabilities
Cash	$ 6,000	Accounts payable	$ 13,000
Accounts receivable	11,000	Total current liabilities	$ 13,000
Inventories	23,000	Long-term debt	130,000
Total current assets	$ 40,000	Stockholders' equity
Net plant and equipment	170,000	Common stock plus additional paid-in capital	15,000
		Retained earnings	52,000
Total assets	$ 210,000	Total liabilities plus stockholders' equity	$ 210,000

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 0.40.

Qusetion 1: What is the required external financing over the next year?

Reference no: EM132465471

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What is the required external financing over the next year

Reference no: EM132465471

Reference no: EM132465471

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