You have the balance sheet and income statement for ITT Annual Assets ($M) Y1 An
ID: 2733897 • Letter: Y
Question
You have the balance sheet and income statement for ITT
Annual Assets ($M)
Y1
Annual Liabilities ($M)
Y1
Cash & Equivalents
67
Notes Payable
13
Accounts Receivable
100
Accounts Payable
115
Inventories
248
Accruals
102
Other Current Assets
41
Other Current Liability
34
Total Current Assets
456
Total CL
264
Prop, Plant & Equip
528
Long Term Debt
137
- Accumulated DEP
145
Total Liabilities
401
Net Prop & Equip
383
Common Equity
11
Intangibles & Other
31
Retained Earnings
458
Total Fixed Assets
414
Shareholder Equity
469
TOTAL ASSETS
870
TOTAL LIAB & Equity
870
INCOME STATEMENT ($M)
Y1
Net Sales
1930
Cost of Goods Sold
1190
SG&A Expenses
450
Depreciation
30
Earnings Before Interest & Tax (EBIT)
260
Interest Expense
10
Earnings Before Tax
250
Taxes (40%)
100
Net Income
150
Dividends
50
Assume sales grow by 30% next year. Cost of goods sold grows with sales, but selling, general and administrative (SG&A) expenses grow by 35%. Assume depreciation expense and gross property, plant and equipment both grow 25%. The tax rate is 40%. The firm plans to pay $50M in dividends next year. All spontaneous assets and liabilities grow with sales except accruals, other current assets and other current liabilities, which grow 25%. Spontaneous assets and liabilities are current asset and liability accounts that follow sales (i.e. cash, receivables and payables). Intangibles, notes payable and common stock will not change. Holding long-term debt constant and interest expense constant, estimate the additional funds needed
Annual Assets ($M)
Y1
Annual Liabilities ($M)
Y1
Cash & Equivalents
67
Notes Payable
13
Accounts Receivable
100
Accounts Payable
115
Inventories
248
Accruals
102
Other Current Assets
41
Other Current Liability
34
Total Current Assets
456
Total CL
264
Prop, Plant & Equip
528
Long Term Debt
137
- Accumulated DEP
145
Total Liabilities
401
Net Prop & Equip
383
Common Equity
11
Intangibles & Other
31
Retained Earnings
458
Total Fixed Assets
414
Shareholder Equity
469
TOTAL ASSETS
870
TOTAL LIAB & Equity
870
Explanation / Answer
balance sheet current assets cash 67 accounts receivables 100 inventories 248 other current assets 41 total of current assets 456 fixed assets and investments property plant and equipments 528 383 accumulated dep 145 intangible 31 total of fixed assets 414 total of assets 870 Liabilities current liabilities notes payable 13 accounts payable 115 accruals 102 other current liabilities 34 total of current liabilities 264 long term liabilities and owner's equity long term liabilities long term debt 137 total of long term liabilities 137 owner's equity 469 common stock 11 retained eranngs 458 total of long term liability and owner's equity 870
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