he most recent financial statements for Xporter, Inc., are shown here: Income St

Question

he most recent financial statements for Xporter, Inc., are shown here: Income Statement Balance Sheet Sales $ 6,300 Current assets $ 3,000 Current liabilities $ 2,200 Costs 5,100 Fixed assets 9,400 Long-term debt 3,750 Taxable income $ 1,200 Equity 6,450 Taxes (34%) 408 Total $ 12,400 Total $ 12,400 Net income $ 792 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’s sales are projected to increase by exactly 15 percent. What is the external financing needed? (Round your answer to 2 decimal places. (e.g., 32.16))

Explanation / Answer

External Financing Needed is $984.

$ % to Sales Next year figure$ Sales     6,300                  7,245 ($6300*115%) Less:Costs     5,100        80.95                  5,865 ($7245*80.95%) Taxable Incomes     1,200                  1,380 Less:Taxes 34%        408                     469 Net Income        792                     911 Dividend Payout 40%        317                     364 Retained Earnings 60%        475                     546 Fixed Asset     9,400      149.21                10,810 ($7245*149.21%) Current Asset     3,000        47.62                  3,450 ($7245*47.62%) Total    12,400                14,260 Equity     6,450                  6,996 ($6450+$546) Retained Earnings        475 Current Laibilities     2,200        34.92                  2,530 Long term debt     3,750                  3,750 External Financing Needed                     984 ($14,260-$6,996-$2,530-$3,750) Total    12,875                14,260

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