Sales are projected to increase 25%. The dividend payout ratio is expected to re
ID: 2773109 • Letter: S
Question
Sales are projected to increase 25%. The dividend payout ratio is expected to remain constant and the company is operating at full capacity. Prepare the current and pro forma income statements and balance sheets to:
1. Calculate how much external financing is needed, if any.
2. Using the information, calculate the sustainable growth rate.(Enter as a whole percentage without the % sign)
Accounts Payable
$6,000
Accounts Receivable
$5,000
Cash
$3,000
Common Stock
$13,000
Costs
$17,000
Fixed Assets
$30,000
Inventory
$7,000
Long-Term Debt
$15,000
Notes Payable
$3,000
Retained Earnings
$8,000
Sales
$20,000
Tax Rate
34%
Dividend Payout Ratio
40%
Accounts Payable
$6,000
Accounts Receivable
$5,000
Cash
$3,000
Common Stock
$13,000
Costs
$17,000
Fixed Assets
$30,000
Inventory
$7,000
Long-Term Debt
$15,000
Notes Payable
$3,000
Retained Earnings
$8,000
Sales
$20,000
Tax Rate
34%
Dividend Payout Ratio
40%
Explanation / Answer
BALANCE SHEET
INCOME STATEMENT
EQUITY SECTION
Forecasted Sales S1 20000*(1+0.05) 25000 EFN=((45000/20000)*(25000-20000))-((6000/20000)*(25000-20000))-((1980/20000)*(25000)*(1188/1980)) EFN=11250-1500-1485 8265Related Questions
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