Given the financial statements below for Dragonfly Enterprises, what is the exte

Question

Given the financial statements below for Dragonfly Enterprises, what is the external financing need for a pro forma increase in sales of 23% if the firm is operating at 92% capacity? Enter your answer as the nearest whole (e.g., 123), but do not include the $ sign. Dragonfly Enterprises Income Statement ($ Million) 2011 Sales 370 Cost of Goods Sold 226 Selling, General, & Admin Exp. 62 Depreciation 20 Earnings Before Interest & Taxes 62 Interest Expense 12 Taxable Income 50 Taxes at 40% 20 Net Income 30 Dividends 9 Addition to Retained Earnings 21 Balance Sheets as of 12-31 Assets 2010 2011 Cash 10 10 Account Receivable 46 50 Inventory 43 45 Total Current Assets 99 105 Net Fixed Assets 166 195 Total Assets 265 300 Liabilities and Owners Equity 2010 2011 Accounts Payable 26 30 Notes Payable 0 0 Total Current Liabilities 26 30 Long-Term Debt 140 150 Common Stock 22 22 Retained Earnings 77 98 Total Liab. and Owners Equity 265 300

Explanation / Answer

BALANCE SHEET 2011 Basis of projection 2012 Cash 10 2.70% of sales 12 Accounts receivable 50 13.51% of sales 62 Inventory 45 12.16% of sales 55 Current assets 105 129 Net fixed assets 195 +21.60% 237 TOTAL ASSETS 300 366 Accounts payable 30 8.11% of sales 37 Notes payable 0 0 Current liabilities 30 37 Long term debt 150 150 Common stock 22 22 Retained earnings 98 +27.00 125 300 334 EFN-Forecasted Line of credit 32 INCOME STATEMENT Sales 370 +23% 455 COGS 226 61.08% of sales 278 Selling, General and Admn. Exp 62 16.76% of sales 76 Depreciation 20 + 21.6% 24 EBIT 62 77 Interest expense 12 12 Taxable income 50 65 Taxes (40%) 20 26 Net Income 30 39 Dividend (30%) 9 12 Retained earnings 21 27 Notes: 1) Net fixed assets will increase by = 92*123%-92 = 21.60% 2) Depreciation will also increase by 21.60% from 2011. 3) 2010 figures are not required.

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