The most recent financial statements for Bradley, Inc., are shown here (assuming

Question

The most recent financial statements for Bradley, Inc., are shown here (assuming no income taxes): Income Statement Sales Costs $ 6,200 (3,720) Net income 2,480 Balance Sheet 17,360 Debt $9,100 8,260 Assets Equity Total 17,360 Total $17,360 Assets and costs are proportional to sales. Debt and equity are not. No dividends are paid. Next year's sales are projected to be $7,812. What is the external financing needed? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to the nearest whole number.) EFN

Explanation / Answer

Growth rate=(7812-6200)/6200=26%

Hence since costs are proportional to sales;hence new net income would also rise by 26%

Hence new net income=(2480*1.26)=$3124.80

Total assets would be equal to=(17360*1.26)=$21873.60

Total assets=Total debt+Total equity

21873.60=9100+(8260+3124.80)

Hence external financing needed=21873.60-(9100+(8260+3124.80))

=$1389(Approx).

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