Problem 4-27 (Algo) Percent-of-sales method [LO4-3] Owen's Electronics has nine operating plants in seven southwestern states. Sales for last year were $100 million, and the bala sheet at year-end is similar in percentage of sales to that of previous years (and this will continue in the future). All assets (incl fixed assets) and current liabilities will vary directly with sales. The firm is working at full capacity. Cash Accounts receivable Inventory Current assets Assets Fixed assets Balance Sheet (in $ millions) $10 22 27 $59 47 Liabilities and Stockholders' Equity Accounts payable Accrued wages Accrued taxes O Current liabilities Notes payable. Common stock Retained earnings $21 8 12 $41 17 21 27
Problem 4-27 (Algo) Percent-of-sales method [LO4-3] Owen's Electronics has nine operating plants in seven southwestern states. Sales for last year were $100 million, and the bala sheet at year-end is similar in percentage of sales to that of previous years (and this will continue in the future). All assets (incl fixed assets) and current liabilities will vary directly with sales. The firm is working at full capacity. Cash Accounts receivable Inventory Current assets Assets Fixed assets Balance Sheet (in $ millions) $10 22 27 $59 47 Liabilities and Stockholders' Equity Accounts payable Accrued wages Accrued taxes O Current liabilities Notes payable. Common stock Retained earnings $21 8 12 $41 17 21 27
Chapter4: Financial Planning And Forecasting
Section: Chapter Questions
Problem 10P
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![Problem 4-27 (Algo) Percent-of-sales method [LO4-3]
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.
Cash
Accounts receivable
Inventory
Current assets
Fixed assets
Assets
Total assets
New funds
$
Balance Sheet (in $ millions)
18
$10
22
27
$59
47
Liabilities and Stockholders' Equity
Accounts payable
Accrued wages
Accrued taxes
Current liabilities
$106
Owen's Electronics has an aftertax profit margin of 8 percent and a dividend payout ratio of 50 percent.
If sales grow by 25 percent next year, determine how many dollars of new funds are needed to finance the growth.
Note: Do not round intermediate calculations. Enter your answer in dollars, not millions, (e.g., $1,234,567).
Notes payable
Common stock
Retained earnings
Total liabilities and stockholders' equity
$ 21
8
12
$ 41
17
21
27
$ 106](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F64349577-16bc-4178-bfd2-df11f961b456%2F668b0c01-16cf-4eaf-a11a-9432237a4c96%2F5kvevnb_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Problem 4-27 (Algo) Percent-of-sales method [LO4-3]
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.
Cash
Accounts receivable
Inventory
Current assets
Fixed assets
Assets
Total assets
New funds
$
Balance Sheet (in $ millions)
18
$10
22
27
$59
47
Liabilities and Stockholders' Equity
Accounts payable
Accrued wages
Accrued taxes
Current liabilities
$106
Owen's Electronics has an aftertax profit margin of 8 percent and a dividend payout ratio of 50 percent.
If sales grow by 25 percent next year, determine how many dollars of new funds are needed to finance the growth.
Note: Do not round intermediate calculations. Enter your answer in dollars, not millions, (e.g., $1,234,567).
Notes payable
Common stock
Retained earnings
Total liabilities and stockholders' equity
$ 21
8
12
$ 41
17
21
27
$ 106
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