How would Executive Fruit's financial model change if the dividend payout ratio were cut to 1/3? Use the revised model to generate a new financial plan for 2015 assuming that debt is the balancing item. Show how the financial statements given in Table 18.6 would change. What would be required external financing?

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Comment Assets Net working capital Fixed assets Total assets $220 10% higher 880 10% higher 10% higher $1,100 $ 464 636 Liabilities and shareholders' equity Long-term debt 16% higher (new borrowing-$64; this is the balancing item) Increased by reinvested earnings Again equals total assets Shareholders' equity Total liabilities and shareholders' equity $1,100