Finance 3313 Worksheet 13 Last Updated, April 11, 2016 Problem: If instead of paying out 30% of earnings as dividends, KMS decides not to pay any dividend and instead retain all of its 2010 earnings, how will its net new financing change? Solution: - Total assets = - AP = - Debt = 4,500 + New Financing - SE = - Total Liab (except for New Financing) + SE Therefore, new financing = B Total Liabilities , Stockholders' Equity A 74.134 E] Total Liabilities and Equlty . 90.616 a Net New Financlng Problem: If instead of paying out 30% of earnings as dividends, KMS decides to pay out 50% of earnings as dividends, how will its net new nancing change? Solution: Total assets = 106,927 ' AP = 14,139 - Debt = 4,500 + New Financing ' SE= 74,134 + 4,113 (50% of NI) = 78,247 - Total Liab (except for New Financing) + SE = 14,139 + 4,500 +78,247 = 96,886 - Therefore, 106,927 96,866 = 10,041 Year 2010 2011 Balance Sheet ($0005) Liabilities Accounts Payable 11,982 14,139 Debt 4,500 4,500 Total Liabilities 16,482 18,639 Stockholder's Equity 74,134 78,247 Total Liabilities and Equity 90,616 96,886 Net New Financing 10,041