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If projected sales growth is actually 14.70%, Calculate the EFN. (Refer to Exhibits 19.10 and 19.11.) (Round answer to 2 decimal places, e.g. 0.45. Enter negative amount using either a negative sign preceding the number e.g. -0.45 or parentheses e.g. (0.45).) Exhibit 19.10 Empire Enterprises: Pro Forma Income Statement and Balance Sheet (S millions) Income Statement Net sales $ 120.0 Costs 108.0 Net income $ 12.0 Dividends $ 7.2 Additions to retained earnings $ 4.8 Balance Sheet Assets Liabilities and Stockholders' Equity Change Change Assets $ 60.0 S 10.0 Total debt $ 20.0 $0.0 Equity Total liabilities and stockholder's equity 34.8 4.8 Total assets $60.0 $ 10.0 $ 54.8 $ 4.8 External financing needed (EFN) $ 5.2 $ 5.2

If projected sales growth is actually 14.70%, Calculate the EFN. (Refer to Exhibits 19.10 and 19.11.) (Round answer to 2 decimal places, e.g. 0.45. Enter negative amount using either a negative sign preceding the number e.g. -0.45 or parentheses e.g. (0.45).) Exhibit 19.10 Empire Enterprises: Pro Forma Income Statement and Balance Sheet (S millions) Income Statement Net sales $ 120.0 Costs 108.0 Net income $ 12.0 Dividends $ 7.2 Additions to retained earnings $ 4.8 Balance Sheet Assets Liabilities and Stockholders' Equity Change Change Assets $ 60.0 S 10.0 Total debt $ 20.0 $0.0 Equity Total liabilities and stockholder's equity 34.8 4.8 Total assets $60.0 $ 10.0 $ 54.8 $ 4.8 External financing needed (EFN) $ 5.2 $ 5.2

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Exhibit 19.11 EFN = (Growth rate x Initial assets) - Addition to retained earnings External Funding Needed (EFN) and Growth for Empire Enterprises The exhibit graphically illustrates Equation 19.6, showing the connection between growth rate in sales and EFN. The horizontal axis plots the firm's projected growth rate, and the vertical axis plots EFN. The upward slope of the line illustrates how external financing increases with the growth rate, assuming that the dividend policy is held At some growth rate (9.6% for Empire Enterprises). EFN - 0. A positive EFN means that the firm must find external funding to finance its growth. $5.2 9.6% 20% Projected Growth Rate -$4.8- At low growth rates, EFN is negative (EFN < 0), and the firm has surplus funds. constant. The EFN is $ millions. External Funding Needed (S)
Transcribed Image Text:Exhibit 19.11 EFN = (Growth rate x Initial assets) - Addition to retained earnings External Funding Needed (EFN) and Growth for Empire Enterprises The exhibit graphically illustrates Equation 19.6, showing the connection between growth rate in sales and EFN. The horizontal axis plots the firm's projected growth rate, and the vertical axis plots EFN. The upward slope of the line illustrates how external financing increases with the growth rate, assuming that the dividend policy is held At some growth rate (9.6% for Empire Enterprises). EFN - 0. A positive EFN means that the firm must find external funding to finance its growth. $5.2 9.6% 20% Projected Growth Rate -$4.8- At low growth rates, EFN is negative (EFN < 0), and the firm has surplus funds. constant. The EFN is $ millions. External Funding Needed (S)
Problem 19.17 If projected sales growth is actually 14.70%, Calculate the EFN. (Refer to Exhibits 19.10 and 19.11.) (Round answer to 2 decimal places, e.g. 0.45. Enter negative amount using either a negative sign preceding the number e.g. -0.45 or parentheses e.g. (0.45).) Exhibit 19.10 Empire Enterprises: Pro Forma Income Statement and Balance Sheet ($ millions) Income Statement Net sales $ 120.0 Costs 108.0 Net income $ 12.0 Dividends $ $ 7.2 Additions to retained earnings 4.8 Balance Sheet Assets Liabilities and Stockholders' Equity Change Change Assets $ 60.0 S 10.0 Total debt $ 20.0 $0.0 Equity Total liabilities and stockholder's equity 34.8 4.8 $ 10.0 $ 54.8 $ 5.2 Total assets $ 60.0 $ 4.8 External financing needed (EFN) $ 5.2 The pro forma balance sheet for Empire Enterprises does not balance, and the difference is the amount of EFN. Because the company's board does not wish to issue common stock, the funding will have to take the form of long-term debt.
Transcribed Image Text:Problem 19.17 If projected sales growth is actually 14.70%, Calculate the EFN. (Refer to Exhibits 19.10 and 19.11.) (Round answer to 2 decimal places, e.g. 0.45. Enter negative amount using either a negative sign preceding the number e.g. -0.45 or parentheses e.g. (0.45).) Exhibit 19.10 Empire Enterprises: Pro Forma Income Statement and Balance Sheet ($ millions) Income Statement Net sales $ 120.0 Costs 108.0 Net income $ 12.0 Dividends $ $ 7.2 Additions to retained earnings 4.8 Balance Sheet Assets Liabilities and Stockholders' Equity Change Change Assets $ 60.0 S 10.0 Total debt $ 20.0 $0.0 Equity Total liabilities and stockholder's equity 34.8 4.8 $ 10.0 $ 54.8 $ 5.2 Total assets $ 60.0 $ 4.8 External financing needed (EFN) $ 5.2 The pro forma balance sheet for Empire Enterprises does not balance, and the difference is the amount of EFN. Because the company's board does not wish to issue common stock, the funding will have to take the form of long-term debt.
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