The most recent financial statements for Xporter, Inc., are shown here: Income S

Question

The most recent financial statements for Xporter, Inc., are shown here:

Income Statement                  Balance Sheet

Sales $          7,200              Current assets 3,900              Current liabilities$2,200         

Costs            5,900              Fixed assets     9,800              Long-term debt $3,750

Taxable income$1,300                                                         Equity            7,750

Taxes (34%) 442 Total$13,700                        Total    $13,700

  Net income $858

Assets, costs, and current liabilities are proportional to sales. Long-term debt and equity are not. The company maintains a constant 40 percent dividend payout ratio. As with every other firm in its industry, next year

Explanation / Answer

Total Fund Needed = Increase in Fixed Asset + Increase in Current assets - Increase in Current liabilities

Total Fund Needed = 9800*15%+3900*15%-2200*15% = $ 1725

Next year Income Statement

Internal fund Available = $ 592.02

External financing needed = Total Fund Needed - Internal fund Available

External financing needed = 1725 - 592.02

External financing needed = $ 1132.98

Sales ( 7200*(1+15%))    8,280.00 Cost ( 5900*(1+15%))    6,785.00 Taxable Income    1,495.00 Taxes (34%)       508.30 Net Income       986.70 Dividend (40%)       394.68 Addition to Retained Earning       592.02

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.