The most recent financial statements for Cardinal, Inc., are shown here: Income

Question

The most recent financial statements for Cardinal, Inc., are shown here: Income Statement Sales $33,400 Assets $78,000 Debt$40,900 Costs Balance Sheet 18,700 Equity 37100 Taxable $14,700 $78,000 Tota $78,000 income Taxes (24%) 3,528 Net income$ 11,172 Assets and costs are proportional to sales. Debt and equity are not. A dividend of $4,300 was paid, and the company wishes to maintain a constant payout ratio. Next year's sales are projected to be $40,080. What is the external financing needed? (Do not round intermediate calculations.) External financing needed

Explanation / Answer

Next years income statement will be as follows

Sale= 40080

Costs= 18700*40080/33400= 22440

Taxable income = 17640

Less: tax = 4233.6

Net Income = 13406.4

Equity = 37100+13406.4=50506.4

Assets= 78000*40080/33400= 93600

Debt = Assets- Equity = 43093.6

Existing debt = 40900

EFN = 43093.6- 40900

EFN= 2193.6

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