Clearer Paint Company has plants in 3 major cities. Sales for last year were P100 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. Clearer Paint is already using assets at full capacity. Balance Sheet (in million pesos) Assets Liabilities & Stockholders’ Equity Current assets P50 Accounts payable & accruals P25 Notes payable – long-term 30 Fixed assets 40 Common Stock 15 Retained Earnings 20 Total 90 Total 90 Clearer Paint has an after- tax profit margin of 5%, and a dividend payout ratio of 30%. If sales grow by 10% next year, the required new financing to finance the expansion is
48. Clearer Paint Company has plants in 3 major cities. Sales for last year were P100 million, and the
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Balance Sheet |
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(in million pesos) |
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Assets |
Liabilities & |
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Current assets |
P50 |
Accounts payable & accruals |
P25 |
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Notes payable – long-term |
30 |
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Fixed assets |
40 |
Common Stock |
15 |
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20 |
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Total |
90 |
Total |
90 |
Clearer Paint has an after- tax profit margin of 5%, and a dividend payout ratio of 30%. If sales grow by 10% next year, the required new financing to finance the expansion is
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