Owen’s Electronics has nine operating plants in seven southwestern states. Sales
ID: 2741855 • Letter: O
Question
Owen’s Electronics has nine operating plants in seven southwestern states. Sales for last year were $100 million, and the balance sheet at year-end is similar in percentage of sales to that of previous years (and this will continue in the future). All assets (including fixed assets) and current liabilities will vary directly with sales. The firm is working at full capacity.
Owen’s has an aftertax profit margin of 10 percent and a dividend payout ratio of 40 percent.
If sales grow by 25 percent next year, determine how many dollars of new funds are needed to finance the growth. (Do not round intermediate calculations. Enter your answer in millions, (e.g., $1,234,567).)
Balance Sheet(in $ millions) Assets Liabilities and Stockholders' Equity Cash
$ 12 Accounts payable $ 25 Accounts receivable 30 Accrued wages 12 Inventory 33 Accrued taxes 18 Current assets $ 75 Current liabilities $ 55 Fixed assets 50 Notes payable 20 Common stock 25 Retained earnings 25 Total assets $ 125 Total liabilities and
stockholders' equity $ 125
Explanation / Answer
Working:
New funds $ 10 MillionsRelated Questions
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