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The 2019 financial statements for Growth Industries are presented below. INCOME STATEMENT, 2019 Sales Costs EBIT Interest expense Taxable income Taxes (at 21%) Net income Dividends Addition to retained earnings $ 270,000 185.000 85,000 17.000 68,000 14,280 53,720 $ 21,488 S 32.232 BALANCE SHEET, YEAR-END, 2019 Assets Liabilities Current assets Cash Accounts receivable Inventories Total current assets Net plant and equipment Current liabilities Accounts payable Total current liabilities Long-term debt Stockholders' equity Common stock plus additional paid-in capital Retained earnings Total liabilities plus stockholders' equity 10,000 10,000 3,000 8,000 29,000 40,000 210.000 170.000 15,000 55,000 $ 250,000 Total assets $ 250,000 Sales and costs are projected to grow at 30% a year for at least the next 4 years. Both current assets and accounts payable are projected to rise in proportion to sales. The firm is currently operating at 75% capacity, so it plans to increase fixed assets in proportion to sales. Interest expense will equal 10% of long-term debt outstanding at the start of the year. The firm will maintain a dividend payout ratio of 0.40. What is the required external financing over the next year? (Enter excess cash as a negative number with a minus sign.) External financing

The 2019 financial statements for Growth Industries are presented below. INCOME STATEMENT, 2019 Sales Costs EBIT Interest expense Taxable income Taxes (at 21%) Net income Dividends Addition to retained earnings $ 270,000 185.000 85,000 17.000 68,000 14,280 53,720 $ 21,488 S 32.232 BALANCE SHEET, YEAR-END, 2019 Assets Liabilities Current assets Cash Accounts receivable Inventories Total current assets Net plant and equipment Current liabilities Accounts payable Total current liabilities Long-term debt Stockholders' equity Common stock plus additional paid-in capital Retained earnings Total liabilities plus stockholders' equity 10,000 10,000 3,000 8,000 29,000 40,000 210.000 170.000 15,000 55,000 $ 250,000 Total assets $ 250,000 Sales and costs are projected to grow at 30% a year for at least the next 4 years. Both current assets and accounts payable are projected to rise in proportion to sales. The firm is currently operating at 75% capacity, so it plans to increase fixed assets in proportion to sales. Interest expense will equal 10% of long-term debt outstanding at the start of the year. The firm will maintain a dividend payout ratio of 0.40. What is the required external financing over the next year? (Enter excess cash as a negative number with a minus sign.) External financing

Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter10: Stockholder's Equity
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Problem 88PSA: Ratio Analysis Consider the following information taken from the stockholders equity section: How do...
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The 2019 financial statements for Growth Industries are presented below. INCOME STATEMENT, 2019 Sales Costs EBIT Interest expense Taxable income Taxes (at 21%) Net income Dividends Addition to retained earnings $ 270,000 185,000 85,000 17,000 68,000 14,280 53,720 $21,488 $32,232 BALANCE SHEET, YEAR-END, 2019 Assets Liabilities Current assets Cash Accounts receivable Inventories Total current assets Net plant and equipment Current liabilities Accounts payable Total current liabilities 3,000 2$ 8,000 29,000 $40,000 210.000 Long-term debt Stockholders' equity Common stock plus additional paid-in capital Retained earnings Total liabilities plus stockholders' equity 10,000 10,000 2$ 170,000 15,000 55,000 $ 250,000 Total assets $ 250,000 Sales and costs are projected to grow at 30% a year for at least the next 4 years. Both current assets and accounts payable are projected to rise in proportion to sales. The firm is currently operating at 75% capacity, so it pians to increase fixed assets in proportion to sales. Interest expense will equal 10% of long-term debt outstanding at the start of the year. The firm will maintain a dividend payout ratio of 0.40. What is the required extermal financing over the next year? (Enter excess cash as a negative number with a minus sign.) External financing
Transcribed Image Text:The 2019 financial statements for Growth Industries are presented below. INCOME STATEMENT, 2019 Sales Costs EBIT Interest expense Taxable income Taxes (at 21%) Net income Dividends Addition to retained earnings $ 270,000 185,000 85,000 17,000 68,000 14,280 53,720 $21,488 $32,232 BALANCE SHEET, YEAR-END, 2019 Assets Liabilities Current assets Cash Accounts receivable Inventories Total current assets Net plant and equipment Current liabilities Accounts payable Total current liabilities 3,000 2$ 8,000 29,000 $40,000 210.000 Long-term debt Stockholders' equity Common stock plus additional paid-in capital Retained earnings Total liabilities plus stockholders' equity 10,000 10,000 2$ 170,000 15,000 55,000 $ 250,000 Total assets $ 250,000 Sales and costs are projected to grow at 30% a year for at least the next 4 years. Both current assets and accounts payable are projected to rise in proportion to sales. The firm is currently operating at 75% capacity, so it pians to increase fixed assets in proportion to sales. Interest expense will equal 10% of long-term debt outstanding at the start of the year. The firm will maintain a dividend payout ratio of 0.40. What is the required extermal financing over the next year? (Enter excess cash as a negative number with a minus sign.) External financing
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