The most recent financial statements for Xporter, Inc., are shown here: Balance

Question

The most recent financial statements for Xporter, Inc., are shown here: Balance Sheet Income Statement Sales Costs S 7,100 Current assets S 3,800 Current liabilities 2,200 5,850 Fixed assets 9,800 Long-term debt 3,750 7,650 $13,600 Taxable income $1,250 Equity Taxes (34%) 425 Total $13,600 Total Net income $ 825 Assets, costs, and current liabilities are proportional to sales. Long-term debt and equity are not. The company maintains a constant 20 percent dividend payout ratio. As with every other firm in its industry, next year's sales are projected to increase by exactly 12 percent. What is the external financing needed? (Round your answer to 2 decimal places. (e.g., 32.16)) External financing needed

Explanation / Answer

Total assets would be=$13600*1.12=$15232

Total current liabilities=(2200*1.12)=$2464

while total equity=$7650+Addition to retained earnings

=(7650+739.2)=$8389.2

Total assets=Total debt+Total equity

Hence external financing needed=15232-[(2464+3750)+8389.2]

=$628.80

Sales(7100*1.12) $7952 Costs(5850*1.12) $6552 Taxable income $1400 Taxes@34% $476 Net income $924 Less:Dividends(924*0.2) $184.80 Addition to retained earnings $739.20

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