1. A firm has total assets of $260,000, long-term debt of $90,000, stockholders' equity of $120,000, and current liabilities of $50,000. The dividend payout ratio is 40 percent and the profit margin is 7 percent. Assume all assets and current liabilities change spontaneously with sales and the firm is currently operating at full capacity. What is the external financing need if the current sales of $300,000 are projected to increase by 10 percent?
$7,140
$14,210
$8,495
$13,200
$4,280
2. The CFO of Organic Foodstuff Ltd., has created the firm s pro forma balance sheet for the next fiscal year. Sales are projected to grow by 10 percent to $400 million. Current assets, fixed assets, and short-term debt are 20 percent, 75 percent, and 15 percent of sales, respectively. Organic Foodstuff pays out 30 percent of its net income in dividends. The company currently has $105 million of long-term debt and $46 million in common stock par value. The profit margin is 9 percent. Based on the CFO s sales growth forecast, how much does Organic Foodstuff need in external funds for the upcoming fiscal year? (Hint: you need to construct the balance sheet this year and determine the accumulated retained earnings before constructing the proforma balance sheets to determine the EFN)
$3,612,767
$3,890,909
$4,102,360
$4,210,880
$4,420,807