External Financing Assignment | Homework For You |

External Financing Assignment | Homework For You |

External Financing Assignment | Homework For You |

The Manning Company has financial statements as shown next, which are representative of the company’s historical average. The firm is expecting a 30 percent increase in sales next year, and management is concerned about the company’s need for external funds. The increase in sales is expected to be carried out without any expansion of fixed assets, but rather through more efficient asset utilization in the existing store. Among liabilities, only current liabilities vary directly with sales.
Income Statement
Sales
$
260,000
Expenses

197,800
Earnings before interest and taxes
$
62,200
Interest

7,600
Earnings before taxes
$
54,600
Taxes

15,600
Earnings after taxes
$
39,000
Dividends
$
9,750

Balance Sheet
Assets
Liabilities and Stockholders’ Equity
Cash
$
9,000
Accounts payable
$
23,000
Accounts receivable

74,000
Accrued wages

1,800
Inventory

99,000
Accrued taxes

3,800
Current assets
$
182,000
Current liabilities
$
28,600
Fixed assets

86,000
Notes payable

7,600

Long-term debt

18,000

Common stock

126,000

Retained earnings

87,800
Total assets
$
268,000
Total liabilities and stockholders’ equity
$
268,000

 
Using the percent-of-sales method, determine whether the company has external financing needs, or a surplus of funds. (Hint: A profit margin and payout ratio must be found from the income statement.) (Do not round intermediate calculations.) Get Finance homework help today
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External Financing Assignment | Homework For You |

External Financing Assignment | Homework For You |

The Manning Company has financial statements as shown next, which are representative of the company’s historical average. The firm is expecting a 30 percent increase in sales next year, and management is concerned about the company’s need for external funds. The increase in sales is expected to be carried out without any expansion of fixed assets, but rather through more efficient asset utilization in the existing store. Among liabilities, only current liabilities vary directly with sales.
Income Statement
Sales
$
260,000
Expenses

197,800
Earnings before interest and taxes
$
62,200
Interest

7,600
Earnings before taxes
$
54,600
Taxes

15,600
Earnings after taxes
$
39,000
Dividends
$
9,750

Balance Sheet
Assets
Liabilities and Stockholders’ Equity
Cash
$
9,000
Accounts payable
$
23,000
Accounts receivable

74,000
Accrued wages

1,800
Inventory

99,000
Accrued taxes

3,800
Current assets
$
182,000
Current liabilities
$
28,600
Fixed assets

86,000
Notes payable

7,600

Long-term debt

18,000

Common stock

126,000

Retained earnings

87,800
Total assets
$
268,000
Total liabilities and stockholders’ equity
$
268,000

 
Using the percent-of-sales method, determine whether the company has external financing needs, or a surplus of funds. (Hint: A profit margin and payout ratio must be found from the income statement.) (Do not round intermediate calculations.) Get Finance homework help today
TOP ACADEMIC WRITER
He has decades of experience in the education field and has served in the examination boards of some of the top Universities within & outside the United States America.

Related

External Financing Assignment | Homework For You |

 


External Financing Assignment | Homework For You |

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