Discussion question- Need ASAP

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Please refer to the hypothetical financial statements below.  Assume a constant profit margin and dividend payout ratio.  Also, assume that this firm's assets and liabilities all vary proportionately with sales.  If sales are projected to increase by 10 percent, what is the external financing needed for the following year? Hint: In order to determine this amount, you must first construct a forecasted income statement.  What if sales are expected to increase by 20%?

 

2015

Income Statement

 

Sales

17300

Cost of goods sold

10600

Depreciation

3280

EBIT

3450

Interest 

680

EBT

2770

Tax

940

Net Income (EAT)

1830

Dividends

450

 

 

Balance Sheet

 

Assets

 

Current assets:

 

Cash and securities

350

Accounts receivable

940

Inventories

2360

Total current assets

3650

Net fixed assets

10850

Total assets

14500

 

 

Liabilities and owners' equity

 

Current liabilities

 

Bank loan

0

Accounts payable

1920

Total current liabilities

1920

Long-term debt

3500

Common stock

7500

Retained earnings

1580

Total liabilities and owners' equity

14500

Internal