The most recent financial statements for Fleury Inc., follow. Sales for 2012 are
ID: 2612951 • Letter: T
Question
The most recent financial statements for Fleury Inc., follow. Sales for 2012 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.
The most recent financial statements for Fleury Inc., follow. Sales for 2012 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.
Explanation / Answer
Please find the revised Income Statement & Balance Sheet for 2012.
FLEURY, INC.
After putting the revised figures, we see Liabilities is greater than Assets. That means, there is an inflow of cash which led to 25% increase in Sales. Now, since no debt or equity is issued, the company needs to have made use of notes payable under which a specifice amount of money is obtained for certain purpose and needs to be repaid with interest in a predetermined period. Hence, through notes payable, financing requirement in fulfilled.
Sales 937500 Costs 731250 Other expenses 26250 Earnings before interest and taxes 180000 Interest paid 17,000 Taxable income 163,000 Taxes (20%) 32600 Net income 130,400 Dividends 20,320 Addition to retained earnings 110,080