Question

4. EFN [LO2] The most recent financial statements for Cardinal, Inc., are shown here: Income Statement Sales $25,400 Assets Costs 17,300 Taxable income $ 8,100 Total Taxes (21%) 1,701 Net income $ 6,399 Balance Sheet $61,000 Debt Equity $61,000 Total $26,900 34,100 $61,000 Assets and costs are proportional to sales. Debt and equity are not. A dividend of $2,100 was paid, and the company wishes to maintain a constant payout ratio. Next year's sales are projected to be $29,210. What is the external financing needed? 5. EFN [LO2] The most recent financial statements for Assouad, Inc., are shown here:

Answer 1

The summary answer is, : The External Finance required is $4,204 (Rounded Off)

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D. Computation Saly of percentage or proportion on sales = $25400 Particulars yon sales Amouent ($) 17300 Costs 68.11% (17300 25400 Assets | 61000 240.15% 61000) 259007 B) Computation of Del Income for next year Income Amount C#) Sales 49210 less: Costs __(89210 X68.112.) (19895) Taxable income 9315 Lose : Jaxes (9315X27%) (1956) Net income 7359

Dividend payment for next year Dividend Previous year dividend Xtoo -payout rativ Previous year net income P100 X 100 6399 = 32.82% 1 Current year dividend paid = Net income x dividersc_payout ratio = 7359_x_39.82% = Q 415 _ = Balance sheet 9) Computation of external financing needed I Amount Amount Asseto (29210 x 240.1524) : 170198 by Refer a F Refer i J 22708 -|(26900) I Less: Debt Equity Opening equity Add: Net income → Less: Dividend paid External finance needed 34100 7359 I (2415) (39044) 18209