#7: You are given the most recent financial statements for Jifan Inc. Sales for 2022 are...

 

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#7: You are given the most recent financial statements for Jifan Inc. Sales for 2022 are projected to grow by 20 percent. Interest expense, the tax rate and the dividend payout ratio will remain constant. Costs, other expenses, assets and accounts payable increase spontaneously with sales. Current Assets Cash Accounts Receivable Inventory Total Fixed Assets Net PPE Total Assets Sales Costs Other expenses EBIT Interest paid Taxable Income Taxes (30%) Net Income Dividends Add'n to RE $37,692 57,546 128,376 $223,614 Income Statement Balance Sheet 2021 $615,564 $839,178 $1,235,754 997,956 25,236 $212,562 21,762 $190,800 57,240 $133,560 $53,424 80,136 Current Liabilities Accounts Payable Notes Payable Total Long-term Debt Owner's Equity Common stock Retained Earnings Total Total Liabs & OE $96,822 23,787 $120,609 $229,500 $189,000 300,069 $489,069 $839,178 a) If the firm is operating at full capacity and no new equity is issued, how much EFN is required to support the 20 percent growth rate in sales? b) Suppose the firm was only operating at 80% capacity in 2021. What is the EFN now? c) Suppose the firm was only operating at 80% capacity in 2021 and now wants a 40% increase in sales for 2022. What is the EFN now? Round all your answers to the nearest dollar. #7: You are given the most recent financial statements for Jifan Inc. Sales for 2022 are projected to grow by 20 percent. Interest expense, the tax rate and the dividend payout ratio will remain constant. Costs, other expenses, assets and accounts payable increase spontaneously with sales. Current Assets Cash Accounts Receivable Inventory Total Fixed Assets Net PPE Total Assets Sales Costs Other expenses EBIT Interest paid Taxable Income Taxes (30%) Net Income Dividends Add'n to RE $37,692 57,546 128,376 $223,614 Income Statement Balance Sheet 2021 $615,564 $839,178 $1,235,754 997,956 25,236 $212,562 21,762 $190,800 57,240 $133,560 $53,424 80,136 Current Liabilities Accounts Payable Notes Payable Total Long-term Debt Owner's Equity Common stock Retained Earnings Total Total Liabs & OE $96,822 23,787 $120,609 $229,500 $189,000 300,069 $489,069 $839,178 a) If the firm is operating at full capacity and no new equity is issued, how much EFN is required to support the 20 percent growth rate in sales? b) Suppose the firm was only operating at 80% capacity in 2021. What is the EFN now? c) Suppose the firm was only operating at 80% capacity in 2021 and now wants a 40% increase in sales for 2022. What is the EFN now? Round all your answers to the nearest dollar.

Answer rating: 100% (QA)

To calculate the External Financing Needed EFN in each scenario we need to determine the additional funds required to support the projected sales grow... View the full answer