Homework Answers
| Present sales revenue | $42,700 |
| Expected sales revenue ($42,700*114/100) | $48,678 |
| Current profit margin ($5,500/$42,700*100) | 12.88% |
| Payout Ratio: | |
| Dividends (a) | $1,925 |
| Net Income (b) | $5,500 |
| Payout Ratio (a/b*100) | 35% |
| Retention Ratio (100% - 35%) | 65% |
| Increase in retained earnings due to 14% increase in sales ($48,678*12.88/100*65/100) | $4,075.32 |
| Increase in assets due to 14% increase in sales ([$48,678-$42,700] * $48,900/$42,700) | $6,846 |
| Increase in liabilities due to 14% increase in sales ([$48,678-$42,700] * $3,650/$42,700) | $511 |
| External Financing Needed when sales increase by 14% ($6,846 - $4,075.32 - $511) | $2,260 |
| Therefore, external financing needed when sales increase by 14% is $2,260. | |
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calculations and round your answer to the nearest whole number,
e.g., 32.)
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