Question

Financing verCIE Stevens Textile Corporation's 2018 financial statements are shown below: Balance Sheet as of December 31, 2018 (Thousands of Dollars) Cash $ 1,080 Accounts payable $ 4,320 Receivables 6,480 Accruals 2,880 Inventories 9,000 Line of credit Total current assets $16,560 Notes payable 2,100 Net fixed assets 12,600 Total current liabilities $ 9,300 Mortgage bonds 3,500 Common stock 3,500 Retained earnings 12,860 Total assets $29,160 Total liabilities and equity $29,160 Income Statement for January 1 - December 31, 2018 (Thousands of Dollars) Sales $36,000 Operating costs 32,440 Earnings before interest and taxes $ 3,560 Interest 460 Pre-tax earnings $ 3,100 Taxes (40%) 1,240 Net income $ 1,860 Dividends (45%) $ 837 Addition to retained earnings $ 1,023

for part c please select from "higher or lower"

Thank you!

Answer 1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

v 1x 06:35 ENG 29-02-202057 " X IP195 IG H L I K ILIM IN TOP 1Q IR A INCOME STATEMENT 193 194 195 196 197 198 SALES OPERATING COSTS EBIT INTEREST EBT TAX NET INCOME DIVIDEND (45%) ADDITION TO RETAINED EARNINGS 2018 2019 15% INCREASE 36000 41400 32440 37306 3560 4094 460 560 (10% OF (3500 + 2100 = MORTGAGE BOND + NOTES PAYABLE) 3100 3534 1240 1414 1860 2120 837 9 54 (45% DIVIDEND] 1023 1166 FORECASTED BALANCESHEET TOTAL ASSETS 207 208 TOTAL LIABILITIES & EQUITY 209 2018 1080 6480 9000 CASH RECEIVABLES INVENTORIES 2019 1242 15% INCREASE 7452 15% INCREASE 10350 15% INCREASE 210 ACCOUNTS PAYABLE ACCRUALS LINE OF CREDIT NOTES PAYABLE 2018 4320 2880 0 2100 2019 4968 15% INCREASE 3312 15% INCREASE 2128 (BALANCING FIGURE) 2100 211 212 213 214 215 216 217 NET FIXED ASSETS MORTGAGE BONDS 12600 14490 15% INCREASE COMMON STOCK RETAINED EARNINGS 2916033534 TOTAL S1 S3 CLEAN PRICE $10 BIDDING, UNDERWRITING EUAC AW LIFE 3500 3500 3500 3500 12860 14026 (12860 + 1166) 29160 3 3534 LP, IP, MRP, INFLATION WARR... 1 TOTAL YIELD SPOT AFN BANKING NOTE Sheet2

v 06-36 4* 5ENG 20-02-2020517 X - X Fax IH L D IK IL IM IN 10 P Q IR A AFN $ 2,128 IG234 IG 219 220 ANS a 221 222 ANS b 223 224 ANSC 225 226 LINE OF CREDIT $ 2,128 IF DEBT IS ADDED THROUGH OUT THE YEAR RATHER THAN ONLY AT THE END OF THE YEAR INTEREST EXPENSES WILL BE HIGHER THAN IN PROJECTIONS OF PART a THIS WOULD CAUSE NET INCOME TO BE LOWER THE ADDITION TO RETAINED EARNINGS TO BE LOWER AND THE AFN TO BE HIGHER THUS YOU WOULD HAVE TO ADD NEW DEBT 227 228 229 230 231 238 239 240 241 242 243 YIELD SPOT AFN BANKING NOTE Sheet2 51 53 CLEAN PRICE S10 BIDDING, UNDERWRITING EUAC AW LIFE LP, IP, MRP, INFLATION WARR... :