The most recent financial statements for Xporter, Inc., are shown here: Income S
ID: 2741201 • Letter: T
Question
The most recent financial statements for Xporter, Inc., are shown here: Income Statement Balance Sheet Sales $ 7,100 Current assets $ 3,800 Current liabilities $ 2,200 Costs 5,850 Fixed assets 9,800 Long-term debt 3,750 Taxable income $ 1,250 Equity 7,650 Taxes (34%) 425 Total $ 13,600 Total $ 13,600 Net income $ 825 Assets, costs, and current liabilities are proportional to sales. Long-term debt and equity are not. The company maintains a constant 20 percent dividend payout ratio. As with every other firm in its industry, next year’s sales are projected to increase by exactly 12 percent. What is the external financing needed? (Round your answer to 2 decimal places. (e.g., 32.16)) External financing needed 172.78 is not the answer!
Explanation / Answer
next year balance sheet
sales = 7100 * 1.12 = 7952
costs = 5850 * 1.12 = 6552
taxable income = 1400
taxes = 1400 * 0.34 = 476
net income = 924
current assets = 3800 * 1.12 = 4256
fixed assets = 9800 * 1.12 = 10976
total assets = 15232
current liabilities = 2200 * 1.12 = 2464
longterm debt = 3750
equity = 7650 + 924 * 0.2 = 7834.8
total liabilities = 14048.8
external financing needed = 15232 - 14048.8 = 1183.2