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 the growth. (Do not round intermediate calculations. Enter your answer in dollars, not millions, (e.g., $1,234,567).)
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 |
||||
| 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 | ||||
| 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 the growth. (Do not round intermediate calculations. Enter your answer in dollars, not millions, (e.g., $1,234,567).)
New funds:
When an organization has been in a growing stage it requires a lot of funds, through which they invest in capital and also spend in revenue expenditure and they are different sources thought which they can procure the funds i.e., Equity or Debt
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