14. Use the below information to answer the following question. Income Statement
ID: 2714819 • Letter: 1
Question
14. Use the below information to answer the following question.
Income Statement
For the Year
Sales
$42,700
Cost of goods sold
29,250
Depreciation
3,750
Earnings before interest and taxes
$ 9,700
Interest paid
1,360
Taxable income
$ 8,340
Taxes
2,840
Net income
$ 5,500
Dividends $1,925
Balance Sheet
End-of-Year
Cash
$ 1,320
Accounts receivable
3,780
Inventory
10,200
Total current assets
$15,300
Net fixed assets
33,600
Total assets
$48,900
Accounts payable
$ 3,650
Long-term debt
18,100
Common stock ($1 par value)
15,000
Retained earnings
12,150
Total Liab. & Equity
$48,900
Assume net working capital and all of this firm’s costs increase directly with sales. Also assume the tax rate and the dividend payout ratios are constant. The firm is currently operating at full capacity. What is the external financing need if sales increase by 4 percent?
A. –$1,908
B. –$804
C. –$397
D. $1,201
E. $1,344
14. Use the below information to answer the following question.
Explanation / Answer
14. Use the below information to answer the following question. Income Statement
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