Here are the abbreviated financial statements for Planner\'s Peanuts: INCOME STA

Question

Here are the abbreviated financial statements for Planner's Peanuts: INCOME STATEMENT, 2017 Sales Cost Net income $5,500 4,300 $1,200 BALANCE SHEE, YEAR-END 2016 2017 2016 2017 $8,500 $9,000 Debt 823 $1,000 8,000 $8,500 $9,000 Total $8,500 $9,000 Assets _ Equity7,677 Total Assets are proportional to sales. If the dividend payout ratio is fixed at 50%, calculate the required total external financing for growth rates in 2018 of 25%, 30%, and 35%. (Do not round intermediate calculations. Round your answers to 2 decimal places.) NOTE: Use the growth rates in the question above and not the figures in the table below External Financing Need 15% $ 1,513.02 20% : 25%

Explanation / Answer

Income Statement Base 15.00% 20.00% 25.00% Sales $5,500.00 $6,325.00 $6,600.00 $6,875.00 Cost $4,300.00 $4,945.00 $5,160.00 $5,375.00 Net income $1,200.00 $1,380.00 $1,440.00 $1,500.00 Less : Dividend $600.00 $690.00 $720.00 $750.00 Addition to Retained Earnings $600.00 $690.00 $720.00 $750.00 Base 15.00% 20.00% 25.00% Growth In Assets (6000 x Growth %) $6,000.00 $900.00 $1,200.00 $1,500.00 Less: Retained earnings $690.00 $720.00 $750.00 External financing $210.00 $480.00 $750.00

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