Growth Rate in Sales Assignment | Homework For You

  The most recent financial statements for Scott, Inc., appear below. Sales for 2020 are projected to grow by 25 percent. Interest expense will remain constant; the tax rate and the dividend payout rate also will remain constant. Costs, other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales.

SCOTT, INC. 2019 Income Statement $754,000 589,000 25,000 Sales Costs Other expenses Earnings before interest and taxes Interest expense $140,000 21,000 $119,000 24,990 Taxable income Taxes (21%) $ 94,010 Net income $28,203 Dividends Addition to retained earnings 65,807

SCOTT, INC. Balance Sheet as of December 31, 2019 Liabilities and Owners Equity Current liabilities Accounts payable Notes payable Assets Current assets Cash Accounts receivable $ 21,340 44,280 $ 55,500 14,700 Inventory 98,960 Total $ 70,200 $164,580 Long-term debt Total $137,000

SCOTT, INC. Balance Sheet as of December 31, 2019 Liabilities and Owners Equity Current liabilities Accounts payable Notes payable Assets Current assets $ 21,340 44,280 Cash $55,500 Accounts receivable 14,700 Inventory $ 70,200 98,960 Total $164,580 Long-term debt Total $137,000 Fixed assets Net plant and equipment Owners equity Common stock and paid-in $430,000 surplus 118,000 Retained earnings 269,380 $387,380 Total $594,580 Total liabilities and owners $594,580 Total assets equity

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.) Get Finance homework help today