Question

The most recent financial statements for Scott, Inc., appear below. Sales for 2020 are projected to grow by 25 percent. Interest expense will remain constant; the tax rate and the dividend payout rate also will remain constant. Costs, other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales. SCOTT, INC. 2019 Income Statement Sales Costs Other expenses $762,000 597,000 33,000 Earnings before interest and taxes Interest expense $ 132,000 29,000 Taxable income Taxes (24%) $ 103,000 24,720 Net income $ 78,280 Dividends Addition to retained earnings $23,484 54,796

Answer 1

1 AMOUNT num Cash $ 70,375 $ 15,500 E15 : X V A B Income Statement Sales $ 3 Less: Costs $ 4 Less: Other expenses $ EBIT $ 6 Less: Interest $ EBT $ 8 Less: Tax @ 24% $ Net income $ 10 Less: Dividends $ 11 Retained Earnings $ 5 fx =F13-H13 C D EF ASSETS AMOUNT LIABILITIES & SHAREHOLDER'S EQUITY 952,500 CURRENT ASSETS: LIABILITIES: 746,250 $ 27,675 Account Payable 41,250 Account Receivable $ 56,350 Notes Payable 165,000 Inventory $ 133,700 29,000 Total 136,000 Total $ 217,725 Long Term Debt 32,640 FIXED ASSETS: 103,360 Net plant and equipment $ 547,500 SHAREHOLDER'S EQUITY 31,008 Common Shareholder's Equity 72,352 Accumulated Retained Earnings Total TOTAL OF ASSETS $ 765,225 TOTAL OF LIABILITES & SAHREHOLDER'S EQUITY $ 85,875 $ 145,000 7 $ 122,000 $ 345,732 $ 467,732 $ 698,607 15|External financing is needed $ 66,618

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