Question

The most recent financial statements for Crosby, Inc., follow. Sales for 2018 are projected to grow by 20 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. CROSBY, INC. 2017 Income Statement Sales Costs Other expenses $757,000 613,000 26,000 Earnings before interest and taxes Interest paid $ 118,000 11,600 Taxable income Taxes (24%) $106,400 25,536 Net income $ 80,864 Dividends Addition to retained earnings $30,440 50,424 CROSBY, INC. Balance Sheet as of December 31, 2017 Assets Liabilities and Owners' Equity Current assets Current liabilities Cash $ 24,640 Accounts payable $ 59,000 Accounts receivable 34,000Notes payable 15,800 Inventory 70,880 Total $ 74,800 Total $ 129,520 Long-term debt $ 105,000 Fixed assets Owners' equity Common stock and paid-in $104.000 surplus Retained earnings Net plant and equipment $ 214,000 59,720 Total $ 163,720 Total assets $343.520 Total liabilities and owners' equity $343,520

What is the EFN if the firm wishes to keep its debt-equity ratio constant? (Do not round intermediate calculations and round your answer to the nearest whole dollar amount, e.g., 32.)

Answer 1

Answer inteme statemet befor intercet and lozes = Saks-Costs-other pences amings 3,000 X0)(13. 00 % 120) - (26,000 x 1a01) 08 400- 735600- 3aoo =141600 Toxabc ncome aniny before nterest&oze s-iatesect 130000 Net incomeTaxade neome axable incomexay) 130000-(130000 x 2y1.) -130000- 3100o 48800 addifm1o lintd nel întomeDividmá 1880098e00x (30 ju uo80,e6 1800-92 800 XO.3764345073

88003719 1. 199 32 61608.37 Curret assets cash3u,6u0x120)=29568 Atcoudts ceivalde =(3«,000x1a0f 40800 (10880 a0 ) = 85056 >2568 40880+850 56 = ISS 43y fxed asrts Net pant& Equipmead = 214,000 xlao.= 56800 T0ta assets = 1554a4-a 56800 = Cuent liabtes gable = (5000x2ef. )= 30800 accounts Notec = ISI800 F0800 1S,200 = 8 660o-

m deb lo5,000 owners quirt 104,000 Common slock & faid in cuj^us 59,780 61608. 2 la1328.a 2as3ag.a7 04000 121 328.7 0-la iabikttey& sho holdn's i - 96600 los,o00 +325328. 4i6928.2+ Now, Eeninaning needd(EF N) = "To-tal asets- Total liabildes & pincy shorcholdar' 418224-4 I69a8. a7 --4704.27. ExtnaFrnn needid (FN)=p047