Owen's Electronics has nine operating plants in seven southwestern states. Sales for last year were $100 million, and the balancesheet at year-end is similar in percentage of sales to that of previous years (and this will continue in the future). All assets (includingfixed assets) and current liabilities will vary directly with sales. The firm is working at full capacity.Balance Sheet(in $ millions)Liabilities and Stockholders' EquityAssets$ 20Accounts payableAccrued wagesCash8.Accounts receivable234Inventory25Accrued taxes10$ 34$ 56Notes payableCurrent assetsCurrent liabilitiesFixed assets4414Common stock18Retained earnings34$100Total liabilities and stockholders' equity$ 100Total assetsOwen's Electronics has an aftertax profit margin of 7 percent and a dividend payout ratio of 45 percent.If sales grow by 20 percent next year, determine how many dollars of new funds are needed to finance the growth. (Do not roundintermediate calculations. Enter your answer in dollars, not millions, (e.g., $1,234,567).)New funds

Answer: At full capacity: Spontaneous Assets = Current assets + Fixed assets = $56 + $44 = $100…

If sales grow by 20 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 dollars, not millions, (e.g., $1,234,567).)

If sales grow by 20 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 dollars, not millions, (e.g., $1,234,567).)

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter4: Financial Planning And Forecasting

Section: Chapter Questions

Problem 7P

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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. Balance Sheet(in $ millions) Assets Liabilities and Stockholders' Equity Cash $ 7 Accounts payable $ 20 Accounts receivable 25 Accrued wages 7 Inventory 28 Accrued taxes 13 Current assets $ 60 Current liabilities $ 40 Fixed assets 45 Notes payable 15 Common stock 20 Retained earnings 30 Total assets $ 105 Total liabilities and stockholders' equity $ 105 Owen’s Electronics has an aftertax profit margin of 10 percent and a dividend payout ratio of 45 percent. If sales grow by 20 percent next year, determine how many dollars of new funds are needed to…
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. Balance Sheet(in $ millions) Assets Liabilities and Stockholders' Equity Cash $ 5 Accounts payable $ 15 Accounts receivable 15 Accrued wages 3 Inventory 25 Accrued taxes 9 Current assets $ 45 Current liabilities $ 27 Fixed assets 43 Notes payable 11 Common stock 16 Retained earnings 34 Total assets $ 88 Total liabilities and stockholders' equity $ 88 Owen’s Electronics has an aftertax profit margin of 7 percent and a dividend payout ratio of 50 percent. If sales grow by 20 percent next year, determine how many dollars of new funds are needed to finance…
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