The most recent financial statements for Beneke Fabricators, Inc., follow. Sales

ID: 2728585 • Letter: T

Question

The most recent financial statements for Beneke Fabricators, 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.

If the firm is operating at full capacity and no new debt or equity is issued, what external financing is needed to support the 25 percent growth rate in sales? (Do not round intermediate calculations.)

Find EFN

Explanation / Answer

Ans;

Sales

947500

Cost

741250

Other expense

17500

EBIT

188750

Interest expense

10000

Taxable income

178750

Taxes

71500

Net income

107250

Dividends

42900

Addition to retained earnings

64350

Total Assets after growth = 401,820 *1.25 = 502275

Total liability after growth = (71000+ 102000) * 1.25 = 173000

Common stock and paid-in surplus = 102000

Retained earnings = 140410

Total liabilities and owners’ equity = 102000 + 140410 = 242410

External finance = Total assets - Total liabilities and owners’ equity

= 502275 -173000– 2424210

= 105065