External Funds Needed: Assuming the payout ratio is constant, use Tables 7 and 6
ID: 2769127 • Letter: E
Question
External Funds Needed: Assuming the payout ratio is constant, use Tables 7 and 6 to complete pro forma statements in Tables 8 and 9 based on the percentage of sales method if sales are predicted to grow by 15 percent in one year. Assuming the company is operating at 90 percent capacity for net xed assets, what is the external nancing needed (EFN)? Show EFN in Table 10
Table 6: Skandia Mining Company Statement of Income and Retained Earnings, Year Ended December 31, 2013 (in millions)
Sales $4,250.0
Cost of Goods Sold _3,875.0_
Taxable Income $375.0
Taxes(34%) _127.5___
Net income $247.5
Dividends $82.6
Additions to
retained earnings 164.9
Table 7 Skandia Mining Company Balance Sheet, December 31, 2013 (in millions)
Liabilities and
Assets Stockholders’ Equity
Current assets $900.0 Current liabilities $500.0
Net xed assets _2,200.0_ Long-term debt _1,800.0_
Owners’ equity _800.0_
Total liabilities
Total assets $3,100.0 and equity $3,100.0
Table 8: Skandia Mining Company Pro Forma Statement of Income and Retained Earnings, Year Ended December 31, 2013 (in millions)
Sales $ Forecast
Cost of Goods
Sold _$_____ %
Taxable Income $
Taxes(34%) _$______
Net income $
Dividends $ % of net income
Additions to retained earnings $
Table 9: Skandia Mining Company Balance Sheet, December 31, 2013 (in millions)
Liabilities and
Assets Stockholders’ Equity
Current assets $ % Current liabilities $ %
Net xed assets _$_________%_ Long-term debt $ %
Owners’ equity _$__________%_
Total liabilities
Total assets $ % and equity $ %
Table 10: Skandia Mining Company Balance Sheet, December 31, 2013 (in millions)
Liabilities and
Assets Stockholders’ Equity
Current assets $ % Current liabilities $ %
Net xed assets _$________%_ Long-term debt $ %
Owners’ equity _$________%_
Total liabilities
Total assets $ % and equity $ %
EFN
Explanation / Answer
Next year sales = 4250*1.15 =4887.5 4887.5 Assets Stockholders’ Equity Ended December 31, 2013 (in millions) Current assets 1035 21% Current liabilty 575 12% Sales 4887.5 Forecast Net fixed assets 2530 52% Long term debt 2070 n/A Cost of Goods 4559.84 4459.844 (91.2% of sales) Owners equity 988.1584 n/A Taxable Income $ 427.6563 Total assets 3565 73% Total liabililty and equity 3633.158 n/A Taxes(34%) _$______ 145.4031 Net income $ 282.2531 EFN 68.1584 n/A Dividends $ % of net income 94.09472 (33.337% of net income) Additions to retained earnings $ 188.1584
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