Question

The most recent financial statements for Moose Tours, Inc., appear below. Sales for 2016 are projected to grow by 25 percent. Interest expense will remain constant, the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales. MOOSE TOURS, INC 2015 Income Statement Sales Costs Other expenses $744,000 579,000 15,000 Earnings before interest and taxes Interest expense $150,000 11,000 Taxable income Taxes (20%) $139,000 27,800 Net income $111,200 Dividends Addition to retained earnings $22,240 88,960 MOOSE TOURS, INC Balance Sheet as of December 31, 2015 Assets Liabilities and Owners' Equity Current assets Current liabilities $54,500 Cash Accounts receivable Inventory $ 20,340 Acounts payable 32,660 Notes paya 69,620 13,700 $68,200 $127,000 yable Total Total $122,620 Long-term debt Fixed assets Owners' equity Net plant and equipment $420,000 Cmmon stock and paid-in surplus $113,000 Retained earnings 234,420 $347,420 $542,620 Total Total assets $542,620 Total liabilities and owners' equity If the firm is operating at full capacity and no new debt or equity is issued, what external financing is needed to support the 25 percent growth rate in sales? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) External financing needed 24345

Answer 1