Round your answer to 2 decimal place The most recent financial statements for Fl
ID: 2820806 • Letter: R
Question
Round your answer to 2 decimal place
The most recent financial statements for Fleury Inc., follow. Sales for next year are projected to grow by 16 percent. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, fixed assets and accounts payable increase spontaneously with sales. FLEURY, INC Income Statement Sales Costs Other expenses $569694 506173 10955 Earnings before interest and taxes Interest paid Taxable income Taxes (30%) 14130 Net income Dividends $5707 FLEURY, INC Balance Sheet Assets Liabilities and Owners' Equity Current assets Current liabilities Cash Accounts receivable Inventory 23278Accounts payable 36470Notes payable 70177 $55353 19240 Long-term debt $116785 Fixed assets Net plant and equipment $ 410094 |Owners' equity $ 122005 Common stock and paid-in surplus Retained earnings If the firm is operating at full capacity and no new debt or equity is issued, what external financing is needed to support the 16 percent growth rate in sales?Explanation / Answer
Answer:
Below figures are obtained from the given Income Statement:
1. Earning Before Interest and Tax = Sales - (Cost + Other expenses) = $52566
2. Taxable Income = EBIT - Interest = $38436
3. Taxes = Taxable Income * 30% = $11530.80
4. Net Income = Taxable Income - Taxes = $26905.20
Below figures are obtained from given Balance Sheet:
1. Reatined Earnings = (23278 + 36470 + 70177 + 410094) - (55353 + 19240 + 116785 + 122005) =$226636
Next year projected Income Statement: (In $)
Projected Balance Sheet:
External Financing needed to fund the growth in sales = $77546.56
Calculation :
1. Cash = (23278 * 1.16) -5707 (Dividnend) = $21295.48
2. Accounts Receivable = 36470 * 1.16 = $42305.20
3. Inventory = 70177 * 1.16 = $81405.32
4. Fixed Assets = 410094 * 1.16 = $475709
5. Accounts Payable = 55353 * 1.16 = $64209.48
6. Retained Earnings = 226636 - 5707 = $220929
Sales 660845 Costs 587160.7 Other Expenses 12707.8 Earning Befor Interest and taxes 60976.56 Interest Paid 14130 Taxable Income 46846.56 Taxes (30%) 14053.97 Net Income 32792.59Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.