The balance sheet and income statement shown below are for Pettijohn Inc. Note t
ID: 2630735 • Letter: T
Question
The balance sheet and income statement shown below are for Pettijohn Inc. Note that the firm has no amortization charges, it does not lease any assets, none of its debt must be retired during the next 5 years, and the notes payable will be rolled over.
Tax rate
40%
Stock price
$17.00
Shares outstanding
3,800,000
Dividends are 50% of net income
Income Statement
Period Ending
31-Dec-13
Total Revenue
148,239,000
COGS
118,094,000
Selling General and Administrative
13,384,000
Depreciation
72,000
Earnings Before Interest And Taxes
16,689,000
Interest Expense
829,000
Income Before Tax
15,860,000
Income Tax Expense (40%)
6,344,000
Net Income
9,516,000
Balance Sheet
Date
31-Dec-13
Assets
Current Assets
Cash
14,468,000
Net Receivables
98,359,000
Inventory
18,758,000
Total Current Assets
131,585,000
Property Plant and Equipment
70,441,000
Total Assets
202,026,000
Liabilities
Current Liabilities
Accounts Payable
22,446,500
Accruals
14,315,500
Notes Payable
3,631,000
Total Current Liabilities
40,393,000
Long Term Debt
134,919,000
Total Liabilities
175,312,000
Stockholders' Equity
Common Stock
40,000
Retained Earnings
26,674,000
Total Stockholder Equity
26,714,000
Total Assets
202,026,000
Calculate the additional or external funds needed if the firm is expecting a growth rate of 10% next year. The firm is currently operating at 95% of capacity and the fixed assets can only by $10,000,000 increments.
Tax rate
40%
Stock price
$17.00
Shares outstanding
3,800,000
Dividends are 50% of net income
Explanation / Answer
Common Size Income Statement Period Ending 31-Dec-13 Amount % Total Revenue 148,239,000 100.00% COGS 118,094,000 79.66% Selling General and Administrative 13,384,000 9.03% Depreciation 72,000 0.05% Earnings Before Interest And Taxes 16,689,000 11.26% Interest Expense 829,000 0.56% Income Before Tax 15,860,000 10.70% Income Tax Expense (40%) 6,344,000 4.28% Net Income 9,516,000 6.42% Common Size Balance Sheet Date 31-Dec-13 Amount % Assets Current Assets Cash 14,468,000 7.16% Net Receivables 98,359,000 48.69% Inventory 18,758,000 9.28% Total Current Assets 131,585,000 65.13% Property Plant and Equipment 70,441,000 34.87% Total Assets 202,026,000 100.00% Liabilities Current Liabilities Accounts Payable 22,446,500 11.11% Accruals 14,315,500 7.09% Notes Payable 3,631,000 1.80% Total Current Liabilities 40,393,000 19.99% Long Term Debt 134,919,000 66.78% Total Liabilities 175,312,000 86.78% Stockholders' Equity Common Stock 40,000 0.02% Retained Earnings 26,674,000 13.20% Total Stockholder Equity 26,714,000 13.22% Total Assets 202,026,000 100.00%
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