The most recent financial statements for GPS, Inc., are shown here (Do not inclu
ID: 2672227 • Letter: T
Question
The most recent financial statements for GPS, Inc., are shown here (Do not include the dollar sign ($). Round your answer to 2 decimal places. (e.g., 32.16)):Income Statement Balance Sheet
Sales $20,000 Assets $96,768 Debt $21,168
Costs 16,000 Equity 75,600
Taxable income
$4,000
Total
$96,768
Total
$96,768
Taxes (34%) 1,360
Net income
$2,640
Assets and costs are proportional to sales. Debt and equity are not. A dividend of $1,056 was paid, and the company wishes to maintain a constant payout ratio. Next year's sales are projected to be $23,800. The external financing needed is
Explanation / Answer
Amount in $ Current year % of sales Next year Sales 20,000.00 23,800.00 Cost 16,000.00 80% 19,040.00 Taxable income 4,000.00 4,760.00 Less: Tax 1,360.00 1,618.40 Net income 2,640.00 3,141.60 Less: dividend 1,056.00 1,256.64 Retained earnings 1,584.00 1,884.96 Payout ratio =1056/2640 40% Assets (proportional to sales) 96,768.00 484% 115,153.92 Balnace Sheet Assets 96,768.00 115,153.92 96,768.00 115,153.92 Liabilities Equity 75,600.00 77,484.96 Debt 21,168.00 37,668.96 (balancing figure) 96,768.00 115,153.92 External debt required = 37,668.96-21,168 16,500.96