The most recent financial statements for Fleury Inc., follow. Sales for 2012 are

Question

The most recent financial statements for Fleury Inc., follow. Sales for 2012 are projected to grow by 25 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.

The most recent financial statements for Fleury Inc., follow. Sales for 2012 are projected to grow by 25 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.

Explanation / Answer

Please find the revised Income Statement & Balance Sheet for 2012.

FLEURY, INC.

After putting the revised figures, we see Liabilities is greater than Assets. That means, there is an inflow of cash which led to 25% increase in Sales. Now, since no debt or equity is issued, the company needs to have made use of notes payable under which a specifice amount of money is obtained for certain purpose and needs to be repaid with interest in a predetermined period. Hence, through notes payable, financing requirement in fulfilled.

Sales 937500 Costs 731250 Other expenses 26250    Earnings before interest and taxes 180000 Interest paid 17,000    Taxable income 163,000 Taxes (20%) 32600    Net income 130,400    Dividends 20,320 Addition to retained earnings 110,080

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