Assets, costs, and current liabilities are proportional to sales. Long-term debt and equity are not. The company maintains a constant 40 percent dividend payout ratio. As with every other firm in its industry, next year's sales are projected to increase by exactly 15 percent. What is the external financing needed?
Income statement Balance Sheet
Sales $17,500 Current assets $10,400 Debt $17,500
Costs 11,800 Fixed assets 28,750 Equity 21,650
Taxable income 5,700 Total 39,150 Total $39,150
Taxes (40%) 2,280
Net Income 3,420