Use the following Income Statement and Balance Sheet of firm X Income Statement
ID: 2645966 • Letter: U
Question
Use the following Income Statement and Balance Sheet of firm X
Income Statement
Balance Sheet
Sales
200,000
Assets
Costs Except Depr.
(90,000)
Cash and Equivalents
17,000
EBITDA
110,000
Accounts Receivable
1,000
Depreciation
(6,000)
Inventories
4,000
EBIT
104,000
Total Current Assets
22,000
Interest Expense (net)
(400)
Property, Plant, and Equipment
10,000
Pretax Income
103,600
Total Assets
32,000
Income Tax
(32,760)
Liabilities and Equity
Net Income
70,840
Accounts Payable
200
Debt
5,000
Total Liabilities
5,200
Stockholders
Income Statement
Balance Sheet
Sales
200,000
Assets
Costs Except Depr.
(90,000)
Cash and Equivalents
17,000
EBITDA
110,000
Accounts Receivable
1,000
Depreciation
(6,000)
Inventories
4,000
EBIT
104,000
Total Current Assets
22,000
Interest Expense (net)
(400)
Property, Plant, and Equipment
10,000
Pretax Income
103,600
Total Assets
32,000
Income Tax
(32,760)
Liabilities and Equity
Net Income
70,840
Accounts Payable
200
Debt
5,000
Total Liabilities
5,200
Stockholders
Explanation / Answer
Total Financing Needed = Total Asset Less Account Payable * Expected Gorwth rate
Total Financing Needed = (32000-200)*15%
Total Financing Needed = $ 4770
Next Year EBIT = 104000*(1+15%) = 119600
Interest Expenses = 400
Pretax Income = 119200
Income Tax = 119200*35% = 41720
Net Income = 77480
Dividend = 77480*80% = 61984
Increase in retained Earning = $ 15496
Internally Financing available = $ 15,496
Therefore External Financing Needed = 0
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