Answer Part b Comparative income statements and balance sheets for Merck million

ID: 2438410 • Letter: A

Question

Answer Part b

Comparative income statements and balance sheets for Merck millions Merck follow: Year 2 Year 1 Income Statement . $47,716 $40,343 28,977 22,444 . 18,739 17,899 6,469 ,464 1,277 329 9,824 3,002 Gross profit 6,531 . 342 . 10,402 3,121 Net income . $ 7,282 6,822 2,976 2,968 Balance Sheet Cash Receivables . $ 3,287 4,255 5,215 5,262 3,022 1,059 . 3,579 . 880 12,96 13,598 . 18,956 16,707 5,225 11,482 15,075 $44,006 $40,155 Total current assets.... Accumulated depreciation 5,853 . 13,103 17,942 Other noncurrent assets... Accounts payable and accrued liabilities.......... . . .. .. 5,904 4,067 1,573 . 11,544 $ 5,391 3,319 1,244 9,954 Short-term debt and current maturities of long-term debt. Total current liabilities.... (continued)

Explanation / Answer

Part b only.

Expected sales:

Sales in year

47,716.00

Add: Growth expected (47716 x 18.27%)

87,17.71

56,433.71

Capital expenditure expected in year 3 (56433.71 x 9.04%)

5,101.61

Thus, assuming the whole capital expenditure of year 3 will be financed by either long term debt or by equity or by both thus, the expected external financing that the organization would be required in year 3 is $5101.61.