Hilltop Inc financial statement is given as follows: Hilltop Inc. 2005 Income Statement Net Sales 12,400 Less:
Question:
Hilltop Inc financial statement is given as follows:
Hilltop Inc. | |
2005 Income Statement | |
Net Sales | 12,400 |
Less: Cost of Goods Sold | 9,100 |
Less: Depreciation | 1,800 |
Earnings before interest and taxes | 1,500 |
Less: Interest Paid | 340 |
Taxable Income | 1,160 |
Less: Taxes | 406 |
Net Income | 754 |
Dividends 301.60
Addition to RE 452.40
Hilltop, Inc. | |||||||
2005 Balance Sheet | |||||||
2005 | 2005 | ||||||
Cash | 900 | Accounts Payable | 1,330 | ||||
Accounts rec. | 840 | Long-term debt | 3,700 | ||||
Inventory | 620 | Common Stock | 4,600 | ||||
Other Short Term | 90 | Retained Earnings | 2,840 | ||||
Total | 2,450 | Total Equity | 7,440 | ||||
Net fixed assets | 10,020 | ||||||
Total Assets | 12,470 | Total liabilities & equity | 12,470 |
1- Assume that Hilltop Inc. is operating at 80 percent of capacity. All costs (including depreciation and interest) and net working capital vary directly with sales. What is the amount of the pro forma net fixed assets if sales are projected to increase by 25 percent?
A. $9,616
B. $10,020
C. $12,040
D. $15,0251
E. $18,781
2. What is the internal growth rate of Hilltop Inc. (based on the current statements) if the dividend payout ratio remains constant?
A. 1.45 percent
B. 2.48 percent
C. 3.77 percent
D. 4.62 percent
E. 6.47 percent
3. Assume that Hilltop Inc. is operating at full capacity and wants to grow at 6.47%. Also assume that Hilltop Inc. maintains a constant dividend payout ratio. All costs (including depreciation and interest) vary directly with sales. All assets and accounts payable vary directly with sales also. The firm does not want to obtain any additional external equity and wants to finance growth through long term debt. How much new long term debt must the firm acquire?
A. $239.088
B. $2,323.42
C. $5,983.376
D. $124.672
E. None of the above
Principles Of Managerial Finance
ISBN: 978-0136119463
13th Edition
Authors: Lawrence J. Gitman, Chad J. Zutter