Homework Answers
Net Income = Dividends + Retained Earnings = 130 + 80 = 210
Additional Funds Needed = [A0 x (ΔS / S0)] - [L0 x (ΔS / S0)] - [S1 x PM x b]
Where,
Ao = current level of assets
Lo = current level of liabilities
ΔS/So = percentage increase in sales i.e. change in
sales divided by current sales
S1 = new level of sales
PM = profit margin = net income / sales = 210 / 1100 = 0.1909, or
19.09%
b = retention rate = 1 - payout rate
Payout Rate = Dividend / Net Income = 130 / 210 = 0.6190, or 61.90%
0 = [1,100 x g] - [0 x g] - [{1100 x (1 + g)} x 0.1909 x (1 - 0.6190)]
0 = [1,100 x g] - 0 - [80 x (1 + g)]
0 = [1,100 x g] - 80 - [80 x g]
80 = [1,020 x g]
g = 80 / 1020 = 0.0784, or 7.84%
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What would be the growth rate at which no external financing
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1. Compute the external financing needed to support the
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Sales for 2012 are projected to grow by 20%. Interest expense will
remain constant. The tax rate and the dividend payout rate will
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13. External Funds Needed The Optical Scam Company has forecast a sales growth rate of 15 percent for next year. The cu...
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projected annual sales growth.
The most recent financial statements for Fleury, Inc., follow.
Sales for 2012 are projected to grow by 20%. Interest expense will
remain constant. The tax rate and the dividend payout rate will
remain constant. Costs, other expenses, current assets, fixed
assets, and accounts payable increase spontaneously with sales. If
the firm is operating at full capacity and no new debt or equity is
issued, what external financing...
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Home Insert Draw Page Layout rormulas Calibri = = = 11 A A QA - ♡ BI U 3 board Alignment Font E : x ✓ fx NO CHAPTER 3 ASSIGNMENT CHAPMAN, INC INCOME STATEMENT, BALANCE SHEET AND RELATED INFORMATION FOR THE YEAR ENDED AND AS OF DECEMBER 31, 2018 Sales $ 891,600 Assets Liabilities and owners' equity Costs 6321600 Current assets Current liabilities Other expenses 18.240 Cash $ 24280 Accounts payable...
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