EFN2 Given the financial statements below for Dragonfly Enterprises, what is the
ID: 2425637 • Letter: E
Question
EFN2
Given the financial statements below for Dragonfly Enterprises, what is the external financing need for a pro forma increase in sales of 17% if the firm is operating at 93% capacity? Enter your answer as the nearest whole (e.g., 123), but do not include the $ sign.
Dragonfly Enterprises
Income Statement ($ Million)
2011
Sales
370
Cost of Goods Sold
226
Selling, General, & Admin Exp.
62
Depreciation
20
Earnings Before Interest & Taxes
62
Interest Expense
12
Taxable Income
50
Taxes at 40%
20
Net Income
30
Dividends
9
Addition to Retained Earnings
21
Balance Sheets as of 12-31
Assets
2010
2011
Cash
10
10
Account Receivable
46
50
Inventory
43
45
Total Current Assets
99
105
Net Fixed Assets
166
195
Total Assets
265
300
Liabilities and Owners Equity
2010
2011
Accounts Payable
26
30
Notes Payable
0
0
Total Current Liabilities
26
30
Long-Term Debt
140
150
Common Stock
22
22
Retained Earnings
77
98
Total Liab. and Owners Equity
265
300
The correct answer is: 5 but how do I show my work to get this number?
Dragonfly Enterprises
Income Statement ($ Million)
2011
Sales
370
Cost of Goods Sold
226
Selling, General, & Admin Exp.
62
Depreciation
20
Earnings Before Interest & Taxes
62
Interest Expense
12
Taxable Income
50
Taxes at 40%
20
Net Income
30
Dividends
9
Addition to Retained Earnings
21
Balance Sheets as of 12-31
Assets
2010
2011
Cash
10
10
Account Receivable
46
50
Inventory
43
45
Total Current Assets
99
105
Net Fixed Assets
166
195
Total Assets
265
300
Liabilities and Owners Equity
2010
2011
Accounts Payable
26
30
Notes Payable
0
0
Total Current Liabilities
26
30
Long-Term Debt
140
150
Common Stock
22
22
Retained Earnings
77
98
Total Liab. and Owners Equity
265
300
Explanation / Answer
Addittion to Retained Earnings = 21@117% = $25
Assets Liabilties
Current 123 Current liabiltiies $35
Fixed assets 212 Long term debt 150
Common stock 22
Retained earnings 123
Total $335 total 330
EFN = $335 - $330
Assets current =105@117%
Calculation of fixed asset = 195/397 * 432.90 = $212.63
( 370 sales @117% = $432.90)
Since 93@117% = 108 it exceeds full capacity, hence 370 / .93 = $397 full capacity sales )
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.