Discussion question- Need ASAP

 Discussion questions and draft are attached. Please confirm calculations and add some context 2 paragraphs) !!

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%?

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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

Sheet1

15

% Additional

:

0

1730

Profit

37

39.00%

39.00%

31%

31%

680 680 Profit

5.4%tax rate

5.4%tax rate

450 450 450 Profit

39%

940 Added 10% to assets > 1034 Added 20% to assets > 1128

Added 10% to assets >

Added 20% to assets > 2832

Added 10% to assets >

Added 20% to assets >

10850 10850

0

730

1920

14500 14500 14500

Discussion I: Team Coffee Grind 2

0 2016 A 2016 B
Income Statement % Additional 2015

Profit
Sales 1

730 10% 19030 20% 3460 20760 6700 0.387

2832
Cost of goods sold 39.00% 10600 11659 12719 Profit Margin 38.7283236994
Depreciation 31% 3280 3614 6436
EBIT 3

450 3933 4448 2016 A:
Interest  680 7371 0.3873357856
EBT 2770 4613 5128 39%
Tax 5.4%tax rate 940 1034 1128
Net Income (EAT) $183,380,000.00 1830 $221,870,770.00 2219 $264,046,440.00 2640 2016 B:
Dividends 8041 0.3873314066
Balance Sheet
Assets
Current assets: Assumptions: Consistant profit margin, dividend payout ration, assets/liabilities all vary proportionately with sales
Cash and securities 350 Added 10% to assets > 385 Added 20% to assets > 420
Accounts receivable
Inventories 2360 2596
Total current assets 3650 4015 4380
Net fixed assets 10850
Total assets 14500 14865 15230
Liabilities and owners’ equity
Current liabilities
Bank loan -365
Accounts payable 1920
Total current liabilities
Long-term debt 3500
Common stock 7500
Retained earnings 1580
Total liabilities and owners’ equity

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