With sales of $400,000, MJM, Inc. is operating at capacity but management anticipates that sales will grow 25 percent during the coming year. The company earns 10 percent on sales and distributes 50 percent of earnings to stockholders. Its current balance sheet is as follows: MJM, Incorporated Balance Sheet as of 12/31/X0 Assets Liabilities and Equity Cash $ 5,500 Accounts payable $ 41,000 Accounts receivable 38,000 Accruals 51,000 Inventory 72,000 Notes payable 0 Current assets 115,500 Current liabilities 92,000 Plant and equipment 100,000 Common stock 70,000 Retained earnings 53,500 Total assets $ 215,500 Total liabilities and equity $ 215,500 In addition to cash, which assets and liabilities will increase with the increase in sales and by how much if the percent of sales is used to forecast the increases? If assets or liabilities does not change enter zero as a forecasted change. Do not round intermediate calculations. Round your answers to the nearest dollar. Assets and Liabilities Change Forecasted change Cash $ Accounts receivable $ Inventory $ Plant and equipment $ Accounts payable $ Accruals $ Notes payable $ How much external finance will the firm need? Round your answer to the nearest dollar. $ If cash did not increase but could be maintained at $5,500, what impact would the lower cash have on the firm's need for external finance? Round your answer to the nearest dollar. Enter your answer as a positive value. If cash remained at $5,500 the need for external funds would be by $ . If the firm distributed 25 percent (2) instead of 50 percent (1) of its earnings, would it need external finance? The net increase in retained earnings comparing (2) with (1) is $ . It cover the external funds needed. Construct a new balance sheet assuming that cash increases with the increase in sales and the firm distributes 50 percent of its earnings to stockholders. If the firm needs external finance, acquire the funds by issuing a short-term note to a commercial bank. Do not round intermediate calculations. Round your answers to the nearest dollar. MJM, Incorporated Balance Sheet as of 12/31/X1 Assets Liabilities and Equity Cash $ Accounts payable $ Accounts receivable Accruals Inventory Notes payable Current assets Current liabilities Plant and equipment Common stock Retained earnings Total assets $ Total liabilities and equity $

With sales of $400,000, MJM, Inc. is operating at capacity but management anticipates that sales will grow 25 percent during the coming year. The company earns 10 percent on sales and distributes 50 percent of earnings to stockholders. Its current balance sheet is as follows: MJM, Incorporated Balance Sheet as of 12/31/X0 Assets Liabilities and Equity Cash $ 5,500 Accounts payable $ 41,000 Accounts receivable 38,000 Accruals 51,000 Inventory 72,000 Notes payable 0 Current assets 115,500 Current liabilities 92,000 Plant and equipment 100,000 Common stock 70,000 Retained earnings 53,500 Total assets $ 215,500 Total liabilities and equity $ 215,500 In addition to cash, which assets and liabilities will increase with the increase in sales and by how much if the percent of sales is used to forecast the increases? If assets or liabilities does not change enter zero as a forecasted change. Do not round intermediate calculations. Round your answers to the nearest dollar. Assets and Liabilities Change Forecasted change Cash $ Accounts receivable $ Inventory $ Plant and equipment $ Accounts payable $ Accruals $ Notes payable $ How much external finance will the firm need? Round your answer to the nearest dollar. $ If cash did not increase but could be maintained at $5,500, what impact would the lower cash have on the firm's need for external finance? Round your answer to the nearest dollar. Enter your answer as a positive value. If cash remained at $5,500 the need for external funds would be by $ . If the firm distributed 25 percent (2) instead of 50 percent (1) of its earnings, would it need external finance? The net increase in retained earnings comparing (2) with (1) is $ . It cover the external funds needed. Construct a new balance sheet assuming that cash increases with the increase in sales and the firm distributes 50 percent of its earnings to stockholders. If the firm needs external finance, acquire the funds by issuing a short-term note to a commercial bank. Do not round intermediate calculations. Round your answers to the nearest dollar. MJM, Incorporated Balance Sheet as of 12/31/X1 Assets Liabilities and Equity Cash $ Accounts payable $ Accounts receivable Accruals Inventory Notes payable Current assets Current liabilities Plant and equipment Common stock Retained earnings Total assets $ Total liabilities and equity $

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter16: Financial Planning And Control

Section: Chapter Questions

Problem 2PROB

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Question

MJM, Incorporated Balance Sheet as of 12/31/X0
Assets		Liabilities and Equity
Cash	$	5,500	Accounts payable	$	41,000
Accounts receivable		38,000	Accruals		51,000
Inventory		72,000	Notes payable		0
Current assets		115,500	Current liabilities		92,000
Plant and equipment		100,000	Common stock		70,000
			Retained earnings		53,500
Total assets	$	215,500	Total liabilities and equity	$	215,500

In addition to cash, which assets and liabilities will increase with the increase in sales and by how much if the percent of sales is used to forecast the increases? If assets or liabilities does not change enter zero as a forecasted change. Do not round intermediate calculations. Round your answers to the nearest dollar.

Assets and Liabilities	Change	Forecasted change
Cash		$
Accounts receivable		$
Inventory		$
Plant and equipment		$
Accounts payable		$
Accruals		$
Notes payable		$

How much external finance will the firm need? Round your answer to the nearest dollar.

$
If cash did not increase but could be maintained at $5,500, what impact would the lower cash have on the firm's need for external finance? Round your answer to the nearest dollar. Enter your answer as a positive value.

If cash remained at $5,500 the need for external funds would be by $ .
If the firm distributed 25 percent (2) instead of 50 percent (1) of its earnings, would it need external finance?

The net increase in retained earnings comparing (2) with (1) is $ . It cover the external funds needed.

Construct a new balance sheet assuming that cash increases with the increase in sales and the firm distributes 50 percent of its earnings to stockholders. If the firm needs external finance, acquire the funds by issuing a short-term note to a commercial bank. Do not round intermediate calculations. Round your answers to the nearest dollar.

MJM, Incorporated Balance Sheet as of 12/31/X1
Assets		Liabilities and Equity
Cash	$		Accounts payable	$
Accounts receivable			Accruals
Inventory			Notes payable
Current assets			Current liabilities
Plant and equipment			Common stock
			Retained earnings
Total assets	$		Total liabilities and equity	$

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