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, 2015 Sales $ 3,000 Cost 2,300 Net income $ 700 BALANCE SHEET, YEAR-END 2014 2015 2014 2015 Assets $ 3,500 $ 4,000 Debt $ 833 $ 1,000 Equity 2,667 3,000 Total $ 3,500 $ 4,000 Total $ 3,500 $ 4,000 Assets are proportional to sales. If the dividend payout ratio is fixed at 50%, calculate the required total external financing for growth rates in 2016 of 15%, 20%, and 25%. (Do not round intermediate calculations. Round your answers to 2 decimal places.) External Financing Need 15% $ 20% $ 25% $

Explanation / Answer

Planner's Peanuts Income Statement Sales $                3,000.00 Cost $                2,300.00 Net Income $                   700.00 Balance sheet Year End Assets 2014 2015 Liabilities 2014 2015 Assets $                3,500.00 $ 4,000.00 Debt $     833.00 $ 1,000.00 Equity $ 2,667.00 $ 3,000.00 Total $                3,500.00 $ 4,000.00 Total $ 3,500.00 $ 4,000.00 Growth Rate 15% 20% 25% Growth in assets $                   600.00 $      800.00 $ 1,000.00 Less: Retained Earning $                   402.50 $      420.00 $     437.50 External Financing $                   197.50 $      380.00 $     562.50 Working Net Income= $                   805.00 $      840.00 $     875.00 External Financing in 2016 at differernt growth rates will be Growth Rate External Financing 15% $                   197.50 20% $                   380.00 25% $                   562.50

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