Question

Owen's Electronics has nine operating plants in seven southwestern states. Sales for last year were $100 million, and the balance sheet at year-end is simlar in percentage of sales to that of previous ye future). All assets (including fixed assets) and current labilities wll vary directy with sales The firm is worlang at fun capacty ars (and this weil cortnue n me Assets Liabilities and Stockholders' Equity $11 Accounts payable 25 Accrued wages 28 Atcrued taxes $ 64 Current liablities 46 Notes payable s 16 Cash Accounts receivable Inventory 34 12 Current assets Common stock Retained earnings 46 110 $110 Total kabilities and stockhoiders' equity Total assets Owen's has an aftertax pront margin ot 10 percent and a dmdend payout ratio of 60 percen i If sales grow by 25 percent next year, determine how many doilars of new funds are needed to fnance the growth (Do not round intermediate calculations. Enter your answer in dollars, not millions, (e s. 31234 567,)

Answer 1

Asset to Sale	= (110000000/100000000)
	110%
Liabilities to Sale	= 34000000/100000000
	34%
New Sales Level	Actual + Expected Growth
	= 100000000+25000000
	$ 125,000,000.00
Profit Margin	10%
Dividend Payout	60%
Required Additional Fund	= (25000000*110%)-(25000000*34%)-10%*(125000000)*(1-0.6)
	= 27500000-8500000-5000000
	$ 14,000,000.00
New Funds	$ 14,000,000.00