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 $750,000 585,000 21,000 Earnings before interest and taxes Interest paid $ 144,000 17,000 Taxable income Taxes (22%) $ 127,000 27,940 Net income $ 99,060 Dividends Addition to retained earnings $ 29,718 69,342 CROSBY, INC. Balance Sheet as of December 31, 2017 Assets Liabilities and Owners' Equity Current assets Current liabilities

Answer 1

1 AMOUNT num Cash $ 66,120 $ 14,300 E15 : X A B Income Statement Sales $ 3 Less: Costs $ 4 Less: Other expenses $ 5 EBIT $ 6 Less: Interest $ EBT $ 8 Less: Tax @ 22% $ Net income $ 10 Less: Dividends $ 11 Retained Earnings $ fc =F13-H13 C D EF ASSETS AMOUNT LIABILITIES & SHAREHOLDER'S EQUITY 900,000 CURRENT ASSETS: LIABILITIES: 702,000 $ 25,128 Account Payable 25,200 Account Receivable $ 52,656 Notes Payable 172,800 Inventory $ 113,952 17,000 Total 155,800 Total $ 191,736 Long Term Debt 34,276 FIXED ASSETS: 121,524 Net plant and equipment $ 553,800 SHAREHOLDER'S EQUITY 36,457 Common Shareholder's Equity 85,067 Accumulated Retained Earnings Total TOTAL OF ASSETS $ 745,536 TOTAL OF LIABILITES & SAHREHOLDER'S EQUITY $ 80,420 $ 133,000 7 $ 116,000 $ 352,447 $ 468,447 $ 681,867 15|External financing is needed $ 63,669 |

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