2. Last year's balance sheet and income statement for the Lewis Company are shown below. The...

Transcribed Image Text:

2. Last year's balance sheet and income statement for the Lewis Company are shown below. The firm operated at full capacity. It expects sales to increase by 20 percent during this year and expects this year's dividends per share to increase to $1.10. If the firm must maintain a "current ratio" of 2.3 and a "total liabilities to total assets" ratio of 40 percent, how much financing will be obtained using notes payable, long-term debt, and common stock? Balance Sheet Cash 80 Income Statement Sales 8,000 Accounts receivable 240 Operating costs 7,450 Inventory 720 EBIT 550 Net fixed assets 3,200 Interest expense 150 Total assets 4,240 EBT 400 Taxes @ 40% 160 Accounts payable 160 Net income 240 Notes payable 252 Accruals 40 Per Share Data Long-term debt 1,244 Share price 16.96 Common stocks Retained earnings 1,605 939 Earnings per share (EPS) 1.60 Dividends per share (DPS) 1.04 Total liabilities and equity 4,240 2. Last year's balance sheet and income statement for the Lewis Company are shown below. The firm operated at full capacity. It expects sales to increase by 20 percent during this year and expects this year's dividends per share to increase to $1.10. If the firm must maintain a "current ratio" of 2.3 and a "total liabilities to total assets" ratio of 40 percent, how much financing will be obtained using notes payable, long-term debt, and common stock? Balance Sheet Cash 80 Income Statement Sales 8,000 Accounts receivable 240 Operating costs 7,450 Inventory 720 EBIT 550 Net fixed assets 3,200 Interest expense 150 Total assets 4,240 EBT 400 Taxes @ 40% 160 Accounts payable 160 Net income 240 Notes payable 252 Accruals 40 Per Share Data Long-term debt 1,244 Share price 16.96 Common stocks Retained earnings 1,605 939 Earnings per share (EPS) 1.60 Dividends per share (DPS) 1.04 Total liabilities and equity 4,240