Assume Marble is projecting a 20% increase in sales for the coming year, with current assets, all costs, and current liabilities proportional to sales. Long-term debt is not proportional to sales. 

  If the firm's tax rate remains unchanged, the dividend payout is 40%, and Marble is operating at 70% of capacity, what is the external financing needed (EFN) for 2018 ($ in millions)?

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Marable Comics Group Balance Sheet for the Years Ending 2014 and 2015 ($ in millions) 2015 Cash Accounts receivable Inventory Current assets Fixed assets Total assets 2014 $75 230 Earnings before taxes Less: Taxes Net income 240 545 788 $135 Accounts payable 214 Notes payable 188 Current liabilities Net sales Less: Cost of goods Sold Less: General & adm. expenses Less: Depreciation Earnings before interest and taxes Less: Interest paid 537Long-term debt 890 Common stock Retained earnings $1,333 $1,427 Total liab. & equity Marble Comics Group 2015 Income Statement ($ in millions) 2014 $89 227 316 615 55 347 $1,333 2015 $110 442 552 440 55 380 $1,427 $905 522 93 110 180 61 119 30 $89 Marable Comics Group Balance Sheet for the Years Ending 2014 and 2015 ($ in millions) 2015 Cash Accounts receivable Inventory Current assets Fixed assets Total assets 2014 $75 230 Earnings before taxes Less: Taxes Net income 240 545 788 $135 Accounts payable 214 Notes payable 188 Current liabilities Net sales Less: Cost of goods Sold Less: General & adm. expenses Less: Depreciation Earnings before interest and taxes Less: Interest paid 537Long-term debt 890 Common stock Retained earnings $1,333 $1,427 Total liab. & equity Marble Comics Group 2015 Income Statement ($ in millions) 2014 $89 227 316 615 55 347 $1,333 2015 $110 442 552 440 55 380 $1,427 $905 522 93 110 180 61 119 30 $89

Answer rating: 100% (QA)

SOLUTION To calculate the external financing needed EFN for 2018 we need to estimate the increase in assets and liabilities based on the projected inc... View the full answer