The most recent financial statements for Crosby, Incorporated, follow. Sales for 2021 are projected to grow by 30 percent. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales. Sales Costs Other expenses CROSBY, INCORPORATED 2020 Income Statement Earnings before interest and taxes Interest paid Taxable income Taxes (23%) Net income Dividends $31,185 Addition to retained earnings 72,765 Current assets Cash Accounts receivable Inventory Total Total assets $20,540 43,480 90,960 $154,980 Fixed assets Net plant and equipment $422,000 $ 746,000 581,000 17,000 CROSBY, INCORPORATED Balance Sheet as of December 31, 2020 Assets $ 576,980 $ 148,000 13,000 $ 135,000 31,050 $ 103,950 Liabilities and Owners' Equity Current liabilities Accounts payable Notes payable Total Long-term debt Owners' equity Common stock and paid-in surplus Retained earnings Total Total liabilities and owners' equity $54,700 13,900 $68,600 $ 129,000 $ 114,000 265,380 $ 379,380 $ 576,980 If the firm is operating at full capacity and no new debt or equity is issued, what external financing is needed to support the 30 percent growth rate in sales? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
The most recent financial statements for Crosby, Incorporated, follow. Sales for 2021 are projected to grow by 30 percent. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales. Sales Costs Other expenses CROSBY, INCORPORATED 2020 Income Statement Earnings before interest and taxes Interest paid Taxable income Taxes (23%) Net income Dividends $31,185 Addition to retained earnings 72,765 Current assets Cash Accounts receivable Inventory Total Total assets $20,540 43,480 90,960 $154,980 Fixed assets Net plant and equipment $422,000 $ 746,000 581,000 17,000 CROSBY, INCORPORATED Balance Sheet as of December 31, 2020 Assets $ 576,980 $ 148,000 13,000 $ 135,000 31,050 $ 103,950 Liabilities and Owners' Equity Current liabilities Accounts payable Notes payable Total Long-term debt Owners' equity Common stock and paid-in surplus Retained earnings Total Total liabilities and owners' equity $54,700 13,900 $68,600 $ 129,000 $ 114,000 265,380 $ 379,380 $ 576,980 If the firm is operating at full capacity and no new debt or equity is issued, what external financing is needed to support the 30 percent growth rate in sales? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:The most recent financial statements for Crosby, Incorporated, follow. Sales for 2021 are
projected to grow by 30 percent. Interest expense will remain constant; the tax rate and
the dividend payout rate will also remain constant. Costs, other expenses, current
assets, fixed assets, and accounts payable increase spontaneously with sales.
Sales
Costs
Other expenses
Earnings before interest and
taxes
Interest paid
CROSBY, INCORPORATED
2020 Income Statement
Taxable income
Taxes (23%)
Net income
Dividends
Addition to retained earnings
Inventory
Total
Current assets
Cash
Accounts receivable
Total assets
$ 31,185
72,765
$20,540
43,480
90,960
$154,980
Fixed assets
Net plant and equipment $ 422,000
$
746,000
581,000
17,000
CROSBY, INCORPORATED
Balance Sheet as of December 31, 2020
Assets
$ 576,980
$ 148,000
13,000
$ 135,000
31,050
103,950
Liabilities and Owners' Equity
Current liabilities
Accounts payable
Notes payable
Total
Long-term debt
Owners' equity
Common stock and paid-in
surplus
Retained earnings
Total
Total liabilities and owners' equity
$ 54,700
13,900
$ 68,600
$ 129,000
$ 114,000
265,380
$ 379,380
$ 576,980
If the firm is operating at full capacity and no new debt or equity is issued, what external
financing is needed to support the 30 percent growth rate in sales? (Do not round
intermediate calculations and round your answer to the nearest whole number, e.g.,
32.)
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