Here are the abbreviated financial statements for Planners Peanuts: Income State

Question

Here are the abbreviated financial statements for Planners Peanuts: Income Statement for 2012 is Sales of $6,000; Cost of $4,700 which gives Net Income of $1,300.00: BALANCE SHEET, YEAR-END is Assets for year 2011 of $9,500 and Assets for year 2012 of $10,000 which each year total the same of (9,500 and 10,000); The Debt Equity for year 2011 is $933 and $8,567 which total $9,500.00 and the debt equity for year 2012 is $1,000 and $9,000 which total $10,000. If the dividend payout ratio is fixed at 50%, calculate the required total external financing for growth rates in 2013 of 20%, 25%, and 30%. (DO NOT ROUND INTERMEDIATE CALCULATIONS. ROUND YOUR ANSWERS TO 2 DECIMAL PLACES.) External Financing at 20% is $________________; 25% $__________________ and 30% $____________________?

Explanation / Answer

Hi, I am assuming income of 1300 for the calculation, since no details have been provide on the growth of sales/assets in the question. Please rate accordingly. 20% Growth in Assets =1300*.20 = 260 Less Retained Earnings = 260*.50 = 130 External Financing = 130 25% Growth in Assets =1300*.25 = 325 Less Retained Earnings = 260*.50 = 162.5 External Financing = 162.5 30% Growth in Assets =1300*.30 = 390 Less Retained Earnings = 260*.50 = 195 External Financing = 195 Thanks.

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