(Actual) December 31, Balance sheet Year 1 Comments Assets Cash $ 450,000 20% increase (assumption) Accounts receivable 2,200,000 20% increase (assumption) Inventories 3,550,000 20% increase (assumption) Total current assets $ 6,200,000 Fixed assets, net $ 1,300,000 No increase (assumption) Total assets (A) $ 7,500,000 Liabilities and Equity Accounts payable (CL) $ 1,400,000 20% increase (assumption) Notes payable 1,100,000 Total current liabilities $ 2,500,000 Long-term debt 500,000 No change (assumption) Stockholders’ equity 4,500,000 Total liabilities and equity $ 7,500,000 Income Statement Year 1 Sales (S) $14,900,000 20% increase (forecasted) Expenses, including interest & taxes 14,000,000 Earnings after taxes (EAT) $ 900,000 Dividends paid (D) 250,000 No change (assumption) Retained earnings $ 650,000 Selected Financial Ratios Current ratio 2.48 times Debt ratio 40.00% Return on stockholders’ equity 20.00% Net profit margin on sales 6.04% Determine the amount of additional financing needed for Year 2 under the following conditions: Increase in Sales Increase in Expenses $2,980,000 $2,800,000 Suppose that the company has excess fixed assets and thatno increase in net fixed assets is required as sales are increased. Assume that the company plans to maintain its dividend payments at the same level in Year 2 as in Year 1. Round your answer to the nearest dollar. $

(Actual) December 31, Balance sheet Year 1 Comments Assets Cash $ 450,000 20% increase ( assumption ) Accounts receivable 2,200,000 20% increase ( assumption ) Inventories 3,550,000 20% increase (...

(Actual)
	December 31,
Balance sheet	Year 1	Comments
Assets
Cash		$ 450,000	20% increase (assumption)
Accounts receivable		2,200,000	20% increase (assumption)
Inventories		3,550,000	20% increase (assumption)
Total current assets		$ 6,200,000
Fixed assets, net		$ 1,300,000	No increase (assumption)
Total assets (A)		$ 7,500,000

Liabilities and Equity
Accounts payable (CL)		$ 1,400,000	20% increase (assumption)
Notes payable		1,100,000

Total current liabilities		$ 2,500,000
Long-term debt		500,000	No change (assumption)
Stockholders’ equity		4,500,000

Total liabilities and equity		$ 7,500,000

Income Statement	Year 1
Sales (S)		$14,900,000	20% increase (forecasted)
Expenses, including interest & taxes		14,000,000
Earnings after taxes (EAT)		$ 900,000
Dividends paid (D)		250,000	No change (assumption)
Retained earnings		$ 650,000

Selected Financial Ratios
Current ratio		2.48 times
Debt ratio		40.00%
Return on stockholders’ equity		20.00%
Net profit margin on sales		6.04%

Determine the amount of additional financing needed for Year 2 under the following conditions:

Increase in Sales	Increase in Expenses
$2,980,000	$2,800,000

Suppose that the company has excess fixed assets and thatno increase in net fixed assets is required as sales are increased. Assume that the company plans to maintain its dividend payments at the same level in Year 2 as in Year 1. Round your answer to the nearest dollar.

Jun 09, 2022

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(Actual) December 31, Balance sheet Year 1 Comments Assets Cash $ 450,000 20% increase ( assumption ) Accounts receivable 2,200,000 20% increase ( assumption ) Inventories 3,550,000 20% increase (...

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