The most recent financial statements for Cornwall, Inc., are shown here: The mos
ID: 2764622 • Letter: T
Question
The most recent financial statements for Cornwall, Inc., are shown here:
The most recent financial statements for Cornwall, Inc., are shown here:
The most recent financial statements for Cornwall, Inc., are shown here: Assets, costs, and current liabilities are proportional to sales. Long-term debt and equity are not. The company maintains a constant 40 percent dividend payout ratio. As with every other firm in its industry, next year's sales are projected to increase by exactly 10 percent. What is the external financing needed? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)Explanation / Answer
External financing needed = Increase in assets - Increase in current liabilities - Retained earnings
= $13,500 * 10% - $2,200 * 10% - $891 * (1 + 10%) * (1 - 40%)
= $541.94