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 $ 8 Accounts payable $ 20 Accounts receivable   23 Accrued wages   4 Inventory   25 Accrued taxes   10 Current assets $ 56 Current liabilities $ 34 Fixed assets   44 Notes payable   14       Common stock   18       Retained earnings   34 Total assets $ 100 Total liabilities and stockholders' equity $ 100     Owen’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 round intermediate calculations. Enter your answer in dollars, not millions, (e.g., $1,234,567).)

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
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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 $ 8 Accounts payable $ 20
Accounts receivable   23 Accrued wages   4
Inventory   25 Accrued taxes   10
Current assets $ 56 Current liabilities $ 34
Fixed assets   44 Notes payable   14
      Common stock   18
      Retained earnings   34
Total assets $ 100 Total liabilities and stockholders' equity $ 100
 

 

Owen’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 round intermediate calculations. Enter your answer in dollars, not millions, (e.g., $1,234,567).)

 

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