Home / Questions / INCOME STATEMENT, 2017 Sales $ 210,000 Costs 155,000 EBIT $ 55,000 Interest expen
INCOME STATEMENT, 2017
Sales
$
210,000
Costs
155,000
EBIT
$
55,000
Interest expense
11,000
Taxable income
$
44,000
Taxes (at 35%)
15,400
Net income
$
28,600
Dividends
$
14,300
Addition to retained earnings
14,300
BALANCE SHEET, YEAR-END, 2017
Assets
Liabilities
Current assets
Current liabilities
Cash
$
4,000
Accounts payable
$
11,000
Accounts receivable
9,000
Total current liabilities
$
11,000
Inventories
27,000
Long-term debt
110,000
Total current assets
$
40,000
Stockholders’ equity
Net plant and equipment
150,000
Common stock plus additional paid-in capital
15,000
Retained earnings
54,000
Total assets
$
190,000
Total liabilities and stockholders' equity
$
190,000
Sales and costs are projected to grow at 20% 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 full 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 0.50.
What is the required external financing over the next year? (Negative amounts should be indicated by a minus sign.)
|
INCOME STATEMENT, 2017 |
|||||||
|
Sales |
|
|
|
$ |
210,000 |
|
|
|
Costs |
|
|
|
|
155,000 |
|
|
|
EBIT |
|
|
|
$ |
55,000 |
|
|
|
Interest expense |
|
|
|
|
11,000 |
|
|
|
Taxable income |
|
|
|
$ |
44,000 |
|
|
|
Taxes (at 35%) |
|
|
|
|
15,400 |
|
|
|
Net income |
|
|
|
$ |
28,600 |
|
|
|
Dividends |
$ |
14,300 |
|
|
|
|
|
|
Addition to retained earnings |
|
14,300 |
|
|
|
|
|
|
|
|
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