Use the following income statement and balance sheets to answer the three questions below the financial...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Use the following income statement and balance sheets to answer the three questions below the financial information: Cash Accounts receivable Inventory Current assets Net fixed assets Total assets 2020 Sales COGS Selling and Admin Depreciation EBIT Interest EBT Taxes Net income 2021 10,615 15,137 10,993 $36,745 274,471 323,808 $311,216 $370,159 11,402 16,815 18,134 $46,351 2021 450,437 258,493 99,406 35,400 57,138 22,000 35,138 8,785 26,354 Accounts payable Notes payable Current liabilities Long-term debt Owners' equity Total liabilities and owners' equity 2020 2021 7633 11489 $19,122 108,600 $183,494 227,441 $311,216 $370,159 8,455 13,123 $21,578 121,140 1) Calculate the following ratios for 2021: Current ratio, quick ratio, asset turnover, inventory turnover, receivables turnover, return on assets, return on equity, profit margin, and equity multiplier. Additionally, use the Dupont identity to deconstruct ROE. 2) The Company expects sales to grow by 15% in 2022. Assets, costs, and current liabilities are proportional to sales. Depreciation, interest, long-term debt and notes payable will remain the same year over year and not increase at the 15% rate. The company maintains a constant 30 percent dividend payout ratio and pays taxes at a 25% rate. What is the external financing needed? Use the percentage of sales method. 3) Using the information from 2022, what is the Company's internal growth rate? Sustainable growth rate? If the Company wanted to grow faster than their internal growth rate but did not want to use external funding, what advice might you give them to increase their internal growth rate? Use the following income statement and balance sheets to answer the three questions below the financial information: Cash Accounts receivable Inventory Current assets Net fixed assets Total assets 2020 Sales COGS Selling and Admin Depreciation EBIT Interest EBT Taxes Net income 2021 10,615 15,137 10,993 $36,745 274,471 323,808 $311,216 $370,159 11,402 16,815 18,134 $46,351 2021 450,437 258,493 99,406 35,400 57,138 22,000 35,138 8,785 26,354 Accounts payable Notes payable Current liabilities Long-term debt Owners' equity Total liabilities and owners' equity 2020 2021 7633 11489 $19,122 108,600 $183,494 227,441 $311,216 $370,159 8,455 13,123 $21,578 121,140 1) Calculate the following ratios for 2021: Current ratio, quick ratio, asset turnover, inventory turnover, receivables turnover, return on assets, return on equity, profit margin, and equity multiplier. Additionally, use the Dupont identity to deconstruct ROE. 2) The Company expects sales to grow by 15% in 2022. Assets, costs, and current liabilities are proportional to sales. Depreciation, interest, long-term debt and notes payable will remain the same year over year and not increase at the 15% rate. The company maintains a constant 30 percent dividend payout ratio and pays taxes at a 25% rate. What is the external financing needed? Use the percentage of sales method. 3) Using the information from 2022, what is the Company's internal growth rate? Sustainable growth rate? If the Company wanted to grow faster than their internal growth rate but did not want to use external funding, what advice might you give them to increase their internal growth rate?
Expert Answer:
Answer rating: 100% (QA)
Given Solution 3 Inorder to increase the internal growt... View the full answer
Related Book For
Financial Accounting
ISBN: 978-0078025549
3rd edition
Authors: J. David Spiceland, Wayne Thomas, Don Herrmann
Posted Date:
Students also viewed these general management questions
-
The following income statement and balance sheets for Virtual Gaming Systems are provided. Required: Assuming that all sales were on account, calculate the following risk ratios for 2015. 1....
-
The following income statement and balance sheets for Virtual Gaming Systems are provided. Required: Assuming that all sales were on account, calculate the following risk ratios for 2021. 1....
-
The following income statement and balance sheets for Virtual Gaming Systems are provided. Earnings per share for the year ended December 31, 2021, are $1.30. The closing stock price on December 31,...
-
Midwest Inc. is a medium-size company that has been in business for 20 years. The industry has become very competitive in the last few years, and Midwest has decided that it must grow if it is going...
-
La Porte Co. produces and sells concrete mixing equipment. On the first day of its fiscal year, La Porte Co. issued $17,500,000 of five-year, 10% bonds at an effective interest rate of 12%, with...
-
Identify the equation. If it is a parabola, give its vertex, focus, and directrix; if it is an ellipse, give its center, vertices, and foci; if it is a hyperbola, give its center, vertices, foci, and...
-
Use the data in Short Exercise 16-12 to prepare Little People Learning Center's (LPLC) statement of cash flows for the year ended June 30, 2005. LPI.C uses the direct method for operating activities....
-
Shaws Garden was started on May 1 with an investment of $45,000 cash. Following are the assets, liabilities, and common stock of the company on May 31, 2014, and the revenues and expenses for the...
-
University Road is best described as the interval [0,1]. Two fast-food restaurants serving identical food are located at the edges of the road, so that restaurant 1 is located on the most left-hand...
-
1. Consider the problem of returning change to a customer requiring the smallest number of coins. a. Show that the greedy algorithm given below returns the smallest number of coins for the coin set...
-
You own a lease that will cost you $8,000 next year, increasing at 3% a year (the forecasted inflation rate) for 3 additional years (4 years total). If discount rates are 10% what is the present...
-
The following three defense stocks are to be combined into a stock index in January 2022 (perhaps a portfolio manager believes these stocks are an appropriate benchmark for his or her performance)....
-
What type of change in terms of strategic, structural, technology, people and etc. applies to legal and tax regarding women in the workplace? substantiate your answer.
-
Describe the HR metrics supported by an HRIS. Also what is the role of HRIS and the role of metrics in the practice of human resources?
-
On December 11, 2007 AT&T announces that it would increase its divided per share by 12.7%. At the same time the company announced a $15.2 billion stock buyback plan. The stock price of AT&T closed up...
-
Solve the following inequality. Express the exact answer in interval notation, restricting your attention to - x . sin(x)
-
Revonce Company sells merchandise on a consignment basis to dealers .The selling price of the merchandise averages 25% above cost. The dealer is paid a 10% commission of the sales price for all sales...
-
Determine the reactions in supports A and D and connections B and C. Sketch its shear and moment diagram and determine the magnitude ankoration of the maximum shear and moment for every member. 18 3...
-
The following account balances appear in the 2015 adjusted trial balance of Blue Devils Corporation: Cash, $5,000; Accounts Receivable, $9,000; Supplies, $19,000; Equipment, $120,000; Accumulated...
-
Fancy Incorporated and Thrift Specialty both offer mens formal footwear. Thrift offers lower-to-middle priced footwear, whereas Fancy offers more specialized, higher-end footwear. The average price...
-
What are the potential risks and rewards of carrying additional debt?
-
What are the three different types of qualified audit opinion? Discuss the circumstances that may cause these qualifications.
-
What is the effect of a fundamental uncertainty on the auditors report?
-
Discuss the work that an auditor performing an initial engagement needs to perform on opening balances.
Study smarter with the SolutionInn App