The most recent financial statements for Beneke Fabricators, Inc., follow. Sales
ID: 2728585 • Letter: T
Question
The most recent financial statements for Beneke Fabricators, 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.
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.)
Find EFN
The most recent financial statements for Beneke Fabricators, 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
Ans;
Sales
947500
Cost
741250
Other expense
17500
EBIT
188750
Interest expense
10000
Taxable income
178750
Taxes
71500
Net income
107250
Dividends
42900
Addition to retained earnings
64350
Total Assets after growth = 401,820 *1.25 = 502275
Total liability after growth = (71000+ 102000) * 1.25 = 173000
Common stock and paid-in surplus = 102000
Retained earnings = 140410
Total liabilities and owners’ equity = 102000 + 140410 = 242410
External finance = Total assets - Total liabilities and owners’ equity
= 502275 -173000– 2424210
= 105065
Sales
947500
Cost
741250
Other expense
17500
EBIT
188750
Interest expense
10000
Taxable income
178750
Taxes
71500
Net income
107250
Dividends
42900
Addition to retained earnings
64350