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Last years financial statements for Weaver Textiles are below. Sales are expected to grow by 15 percent this year. Their tax rate and dividend payout ratio will be the same in the future. Costs, selling and administration expense, current assets, accounts payable, and accrued taxes increase proportionally with sales. Interest expense, notes payable, and long-term debt will be unchanged. Weaver is operating at 92 percent capacity Income Statement Last Year Sales Costs of goods sold Selling and admin. expense Earnings before interest & taxes Interest expense Earnings before taxes Taxes 700,000 385,000 182,000 133,000 84,000 49,000 12,250 36,750 Net income Dividends 22,050 Additions to retained earnings 14,700Balance Sheet Assets Liabilities and Owners Equity 35,000 98,000 21,000 154,000 42,000 112,000 168,000 322,000 Accounts payable Notes payable Accrued taxes payable Accounts receivable Inventory Total current assets Total current liabilities Plant and equipment 420,000 Long-term debt 308,000 Common stock 112,000 Retained earnings 168,000 Total owners equity 280,000 Total assets 742,000 Total liabilities & owners equity 742,000 hat is the external financing needed

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solution Workin Note 2 322000 0.15 calculation of EFN Increase in fixed asset Increase in current assets Less: Increase in spontaneous liability (accounts payable and accrued tax payable) (35000+21000)*0.15 total fund needed Less: addition to retained earning* EFN 24,360.00 48,300.00 8,400.00 64,260.00 - 20,685.00 43,575.00 Note 1 Note 1 :calculation of addition to retained earning 700000*1.15 385000*1.15 182000 1.15 cost of goods sold selling and adm. Expense EBIT Less Interest expense Earning before tax Less :tax Net income Dividend Addition to retained earnin 805,000.00 442,750.00 209,300.00 152,950.00 84,000.00 68,950.00 (12250*68950/49000) 17,237.50 51,712.50 22050*51712.5/36750 31,027.50 20,685.00 Note 2: sales possible by 100% capacity-700000/92%- Required fixed asset to meet expected sales 420000 805000/760869.57 Hence increase in Fixed asset required-444360-420000 760,869.57 444,360.00 24,360.00 Sheet1199 Sheetl 200 Sheet1 201 Sheet1 202 Sheet1 203 Sheet1 204Sheet1 205 Sheet1206 ENG1 UK 30/01/2019 12:42

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