The Optical Scam Company has forecast an 17 percent sales growth rate for next year. The current financial statements are shown below. Current assets, fixed assets, and short-term debt are proportional to sales. INCOME STATEMENT Sales $ 47,000,000 Costs 37,900,000 Taxable income $ 9,100,000 Taxes 3,185,000 Net income $ 5,915,000 Dividends $ 2,366,000 Additions to retained earnings $ 3,549,000 BALANCE SHEET Assets Liabilities and Equity Current assets $ 15,930,000 Short-term debt $ 12,690,000 Long-term debt 13,190,000 Fixed assets 40,000,000 Common stock $ 4,000,000 Accumulated retained earnings 26,050,000 Total equity $ 30,050,000 Total assets $ 55,930,000 Total liabilities and equity $ 55,930,000 Required: a. Using the equation from the chapter, calculate the external funds needed for next year. (Do not include the dollar sign ($). Round your answer to the nearest whole dollar amount. (e.g., 1,234,567)) External funds needed $ _______ c. Calculate the sustainable growth rate for the company. (Do not include the percent sign (%). Round your answer to 2 decimal places. (e.g., 32.16)) Sustainable growth rate ________% d. Suppose Optical Scam eliminates its dividend entirely. What is the new EFN? External funds needed $ ______
The Optical Scam Company has forecast an 17 percent sales growth rate for next year. The current financial statements are shown below. Current assets, fixed assets, and short-term debt are proportional to sales. INCOME STATEMENT Sales $ 47,000,000 Costs 37,900,000 Taxable income $ 9,100,000 Taxes 3,185,000 Net income $ 5,915,000 Dividends $ 2,366,000 Additions to retained earnings $ 3,549,000 BALANCE SHEET Assets Liabilities and Equity Current assets $ 15,930,000 Short-term debt $ 12,690,000 Long-term debt 13,190,000 Fixed assets 40,000,000 Common stock $ 4,000,000 Accumulated retained earnings 26,050,000 Total equity $ 30,050,000 Total assets $ 55,930,000 Total liabilities and equity $ 55,930,000 Required: a. Using the equation from the chapter, calculate the external funds needed for next year. (Do not include the dollar sign ($). Round your answer to the nearest whole dollar amount. (e.g., 1,234,567)) External funds needed $ _______ c. Calculate the sustainable growth rate for the company. (Do not include the percent sign (%). Round your answer to 2 decimal places. (e.g., 32.16)) Sustainable growth rate ________% d. Suppose Optical Scam eliminates its dividend entirely. What is the new EFN? External funds needed $ ______
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
|
The Optical Scam Company has |
| INCOME STATEMENT |
| Sales | $ | 47,000,000 | ||
| Costs | 37,900,000 | |||
| Taxable income | $ | 9,100,000 | ||
| Taxes | 3,185,000 | |||
| Net income | $ | 5,915,000 | ||
| Dividends | $ | 2,366,000 | ||
| Additions to retained earnings | $ | 3,549,000 |
| BALANCE SHEET | |||||
| Assets | Liabilities and Equity | ||||
| Current assets | $ | 15,930,000 | Short-term debt | $ | 12,690,000 |
| Long-term debt | 13,190,000 | ||||
| Fixed assets | 40,000,000 | ||||
| Common stock | $ | 4,000,000 | |||
| |
26,050,000 | ||||
| Total equity | $ | 30,050,000 | |||
| Total assets | $ | 55,930,000 | Total liabilities and equity | $ | 55,930,000 |
| Required: |
| a. |
Using the equation from the chapter, calculate the external funds needed for next year. (Do not include the dollar sign ($). Round your answer to the nearest whole dollar amount. (e.g., 1,234,567)) |
| External funds needed | $ _______ |
| c. |
Calculate the sustainable growth rate for the company. (Do not include the percent sign (%). Round your answer to 2 decimal places. (e.g., 32.16)) |
| Sustainable growth rate | ________% |
| d. | Suppose Optical Scam eliminates its dividend entirely. What is the new EFN? |
| External funds needed | $ ______ |
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