The Soxman Corporation, a plastics molding company, had the following year- end results: Soxman Corporation Sales...

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The Soxman Corporation, a plastics molding company, had the following year- end results: Soxman Corporation Sales 70,600,000 60,716,000 Costs 86 0% of Sales Taxable income (IBT) 9,884,000 14.0% of Sales Taxes 2,075,640 7,808,360 21% Tax Rate Net income Dividends 3,856,800 3,951,560 Addition to retained earnings Current assets 12,500,000 Short-term debt 19,200,000 Long-term debt %24 6,400,000 Net fixed assets 7,800,000 Common stock Accumulated retained earrings Total equity $ 3,200,000 14,300,000 $ 17,500,000 $ 31,700,000 § 31,700,000 Total LAE Total assets For next year, Soxman is making the following planning assumptions: • Revenue growth: 8.5% • IBT Margin: 1 percentage point higher than current year • Tax Rate: Unchanged at 21% • Dividends: Same dollar amount as current year (no change) • Current Assets: Increase 2 percentage points faster than the sales growth rate • Net Fixed Assets: $2.9 million net increase • Long-Term Debt: Repay $1.0 million • Repurchase $1.9 million in common shares (a reduction in "Common Stock") Questions: a. What amount of Short-term Debt will be needed in Box 1 to make this plan possible? b. Your Bank informs you that your Short-Term Borrowing facility is now limited to $7.3 million. To comply with this cap, you decide to defer the purchase of a fifth injection molding center and thus cut the capital spending plan by $800,000 to a $2,100,000 net increase (instead of $2,900,000 increase); and you also decide to reduce the sales growth forecast. All the other parameters set out in Part (A) continue to apply. What is the new growth rate in sales in Box 2 (percentage to one decimal point, like x.x%) that you can support with the credit constraint? The Soxman Corporation, a plastics molding company, had the following year- end results: Soxman Corporation Sales 70,600,000 60,716,000 Costs 86 0% of Sales Taxable income (IBT) 9,884,000 14.0% of Sales Taxes 2,075,640 7,808,360 21% Tax Rate Net income Dividends 3,856,800 3,951,560 Addition to retained earnings Current assets 12,500,000 Short-term debt 19,200,000 Long-term debt %24 6,400,000 Net fixed assets 7,800,000 Common stock Accumulated retained earrings Total equity $ 3,200,000 14,300,000 $ 17,500,000 $ 31,700,000 § 31,700,000 Total LAE Total assets For next year, Soxman is making the following planning assumptions: • Revenue growth: 8.5% • IBT Margin: 1 percentage point higher than current year • Tax Rate: Unchanged at 21% • Dividends: Same dollar amount as current year (no change) • Current Assets: Increase 2 percentage points faster than the sales growth rate • Net Fixed Assets: $2.9 million net increase • Long-Term Debt: Repay $1.0 million • Repurchase $1.9 million in common shares (a reduction in "Common Stock") Questions: a. What amount of Short-term Debt will be needed in Box 1 to make this plan possible? b. Your Bank informs you that your Short-Term Borrowing facility is now limited to $7.3 million. To comply with this cap, you decide to defer the purchase of a fifth injection molding center and thus cut the capital spending plan by $800,000 to a $2,100,000 net increase (instead of $2,900,000 increase); and you also decide to reduce the sales growth forecast. All the other parameters set out in Part (A) continue to apply. What is the new growth rate in sales in Box 2 (percentage to one decimal point, like x.x%) that you can support with the credit constraint?

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