The most recent financial statements for Cardinal, Inc., are shown here: Income Statement Balance Sheet Sales $22,100 Assets $108,000 Debt $42,600 Costs 17,400 Equity 65,400 Taxable income $4,700 Total $108,000 Total $108,000 Taxes (21%) 987 Net income $3,713 Assets and costs are proportional to sales. Debt and equity are not. A dividend of $1,530 was paid, and the company wishes to maintain a constant payout ratio. Next year's sales are projected to be $29,400. What is the external financing needed?
Financial Ratios
A Ratio refers to a figure calculated as a reference to the relationship of two or more numbers and can be expressed as a fraction, proportion, percentage, or the number of times. When the number is determined by taking two accounting numbers derived from the financial statements, it is termed as the accounting ratio.
Return on Equity
The Return on Equity (RoE) is a measure of the profitability of a business concerning the funds by its stockholders/shareholders. ROE is a metric used generally to determine how well the company utilizes its funds provided by the equity shareholders.
|
The most recent financial statements for Cardinal, Inc., are shown here: |
| Income Statement | |||||
| Sales | $22,100 | Assets | $108,000 | Debt | $42,600 |
| Costs |
17,400 |
Equity | 65,400 | ||
| Taxable income | $4,700 | Total |
$108,000 |
Total |
$108,000 |
| Taxes (21%) | 987 | ||||
| Net income |
$3,713 |
||||
|
Assets and costs are proportional to sales. Debt and equity are not. A dividend of $1,530 was paid, and the company wishes to maintain a constant payout ratio. Next year's sales are projected to be $29,400. |
|
What is the external financing needed? |
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 3 images
