The financial statements of ABC company for 2018 are given below. The company expects its sales, costs
Question:
The financial statements of ABC company for 2018 are given below. The company expects its sales, costs and total assets to grow by 20% in 2019. Interest expense in 2019 will be 10% of the outstanding long-term debt at the beginning of the year. If the company plans to maintain its current payout ratio in 2019, how much external financing will the firm need in 2019? The tax rate will remain constant.
INCOME STATEMENT, 2018 | ||||
Sales | 200,000 $ | |||
Costs | 150,000 | |||
CHIEFS | 50,000 | |||
interest expense | 10,000 | |||
taxable income | 40,000 | |||
Taxes (35%) | 14,000 | |||
Net income dividends | 26,000 10,400 | |||
YEAR-END BALANCE SHEET | ||||
2018 | ||||
assets | ||||
Current Assets | 40,000 | |||
fixed assets | 160,000 | |||
Total assets | 200,000 | |||
Liabilities and equity | ||||
Current Liabilities | 10,000 | |||
long-term debt | 100,000 | |||
Equality | 90,000 | |||
Total liabilities and equity | 200,000 |
Fundamentals of Financial Management
ISBN: 978-1337395250
15th edition
Authors: Eugene F. Brigham, Joel F. Houston