Percentage of Sales Approach - Assume all spontancous variables move as a percentage of sales. a)...

  

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Percentage of Sales Approach - Assume all spontancous variables move as a percentage of sales. a) Given an expected increase in sales of 12%, what is the amount of external funding required? b) To maintain the current debt/equity ratio how much debt and how much equity is required? c) Assuming the company is only operating at 95% capacity, how much new funding (if any) is required? Previous Years Sales 1400 Retained Earnings 170 Costs 900 Dividends 180 Tax rate 0.3 Assets Current Assets Liabilities/Equity Current Liabilities Cash 460 Creditors 600 Debtors 540 Short Term Notes 100 Inventory Non-Current Assets 600 Non-Current Liabilities PP&E 2000 Debentures 900 Total Assets 3600 Owner's Equity Retained Profits 1000 Ordinary Shares 1000 3600 Percentage of Sales Approach - Assume all spontancous variables move as a percentage of sales. a) Given an expected increase in sales of 12%, what is the amount of external funding required? b) To maintain the current debt/equity ratio how much debt and how much equity is required? c) Assuming the company is only operating at 95% capacity, how much new funding (if any) is required? Previous Years Sales 1400 Retained Earnings 170 Costs 900 Dividends 180 Tax rate 0.3 Assets Current Assets Liabilities/Equity Current Liabilities Cash 460 Creditors 600 Debtors 540 Short Term Notes 100 Inventory Non-Current Assets 600 Non-Current Liabilities PP&E 2000 Debentures 900 Total Assets 3600 Owner's Equity Retained Profits 1000 Ordinary Shares 1000 3600

Answer rating: 100% (QA)

a Income Statement Previous Year Basis Projection Sales 1400 12 1568 Costs 900 642857 of sales 1008 ... View the full answer