Marcel Industries is currently operating at 85% capacity. They are projecting 15% revenue growth next year...

 

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Marcel Industries is currently operating at 85% capacity. They are projecting 15% revenue growth next year and accordingly, cost of goods sold, selling & administrative expenses, current assets and accounts payable will increase at the same rate as sales growth. Fixed assets and depreciation expense will also increase with sales, if Marcel Industries must purchase new fixed assets to accommodate the increase in sales volume. MARCEL INDUSTRIES Statement of Comprehensive Income For the Year Ended December 31, 2019 Revenue Cost of goods sold Gross Profit Selling and administrative expenses Depreciation EBIT Interest expense EBT Income tax expense Net income $1,841,300 1,397,400 443,900 256,850 14,400 172,650 50,550 122,100 27,100 95,000 MARCEL INDUSTRIES Statement of Financial Position December 31, 2019 ASSETS Cash Short term investments Accounts receivable Inventory Prepaid expenses Net property, plant, and equipment Intangible assets Total Assets LIABILITIES & SHAREHOLDERS'S EQUITY Accounts payable Bank loan payable (due within 1 year) Other current payables Long-term debt Common shares Retained earnings Total liabilities & shareholders' equity $24,700 7,000 361,800 330,000 800 172,900 28,200 $925,400 $196,700 202,000 23,700 181,600 14,000 307,400 $925,400 Required 1. Are new fixed assets required to achieve the projected sales growth? Explain. 2. Calculate the external financing required to achieve the projected sales growth. Marcel Industries is currently operating at 85% capacity. They are projecting 15% revenue growth next year and accordingly, cost of goods sold, selling & administrative expenses, current assets and accounts payable will increase at the same rate as sales growth. Fixed assets and depreciation expense will also increase with sales, if Marcel Industries must purchase new fixed assets to accommodate the increase in sales volume. MARCEL INDUSTRIES Statement of Comprehensive Income For the Year Ended December 31, 2019 Revenue Cost of goods sold Gross Profit Selling and administrative expenses Depreciation EBIT Interest expense EBT Income tax expense Net income $1,841,300 1,397,400 443,900 256,850 14,400 172,650 50,550 122,100 27,100 95,000 MARCEL INDUSTRIES Statement of Financial Position December 31, 2019 ASSETS Cash Short term investments Accounts receivable Inventory Prepaid expenses Net property, plant, and equipment Intangible assets Total Assets LIABILITIES & SHAREHOLDERS'S EQUITY Accounts payable Bank loan payable (due within 1 year) Other current payables Long-term debt Common shares Retained earnings Total liabilities & shareholders' equity $24,700 7,000 361,800 330,000 800 172,900 28,200 $925,400 $196,700 202,000 23,700 181,600 14,000 307,400 $925,400 Required 1. Are new fixed assets required to achieve the projected sales growth? Explain. 2. Calculate the external financing required to achieve the projected sales growth.

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The answer provided below has been developed in a clear step by step manner Step 1 1 Yes Many balanc... View the full answer