Solve for External financing needed and equity in the second table! Please!! Con
ID: 2645791 • Letter: S
Question
Solve for External financing needed and equity in the second table! Please!!
Consider the following simplified financial statements for the Fire Corporation (assuming no income taxes):
Income statement
Balance Sheet
Sales $39,600
Costs $31,800
Net Income $7,800
Assets $ 23,800
Total $23,800
Debt $6,800
Equity 17,000
Total $23,800
The company has predicted a sales increase of 20 percent. Assume Fire pays out half of net income in the form of a cash dividend. Costs and assets vary with sales, but debt and equity do not.
Prepare the pro forma statements. (Round your answers to the nearest whole dollar amount.)
Pro forma income statement
Pro forma balance sheet
Sales $47520
Assets $28560
Debt $6800
Costs $38160
Equity??????
Net Income $9360
Total $28560
Total $28480
Determine the external financing needed. (Negative amount should be indicated by a minus sign.)
External financing needed $ ???????? this is not -80... that is what I keep getting
I also need to the know the equity in the second table
Solve for External financing needed and equity in the second table! Please!!
Consider the following simplified financial statements for the Fire Corporation (assuming no income taxes):
Income statement
Balance Sheet
Sales $39,600
Costs $31,800
Net Income $7,800
Assets $ 23,800
Total $23,800
Debt $6,800
Equity 17,000
Total $23,800
Explanation / Answer
Since the half of the net income is paid out in cash
Retained earnings=0.5*Net Income
Income Statement
Balance Sheet
Sales
47520
Asset
28560
Debt
6800
Costs
38160
Cash
3900
Equity
21760
Net Income
9360
Retained earning
3900
Total Asset
32460
Total
32460
Equity=Total-Debt-Retained earning=32460-6800-3900=21760
External financing needed=Equity (forecasted)-Equity(Current)=21760-17000=4760
Or
External financing needed=Asset (forecasted)-Asset(Current)=28560-23800=4760
Income Statement
Balance Sheet
Sales
47520
Asset
28560
Debt
6800
Costs
38160
Cash
3900
Equity
21760
Net Income
9360
Retained earning
3900
Total Asset
32460
Total
32460
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