Sustainable Sales Growth Rates and Additional Funds Needed-Following are two years of income statements and balance sheets for the Munich Exports Corporation. MUNICH EXPORTS CORPORATION 2009 2010 Cash $50,000 $50,000 Accounts receivable 200,000 300,000 Inventories 450,000 570,000 Total current assets 700,000 920,000 Fixed assets, net 300,000 380,000 Total assets $1,000,000 $1,300,000 Accounts payable $130,000 $180,000 Accruals 50,000 70,000 Bank loan 90,000 90,000 Total current liabilities 270,000 340,000 Long-term debt 400,000 550,000 Common stock ($0.05 par) 50,000 50,000 Additional paid-in-capital 200,000 200,000 Retained earnings 80,000 160,000 Total liabilities and equity $1,000,000 $1,300,000 Net sales $1,300,000 $1,600,000 Cost of goods sold 780,000 960,000 Gross profit 520,000 640,000 Marketing 130,000 160,000 General and administrative 150,000 150,000 Depreciation 40,000 55,000 EBIT $200,000 $275,000 Interest 45,000 55,000 Earnings before taxes 155,000 220,000 Income taxes (40% rate) 62,000 88,000 Net income $93,000 $132,000 Cash dividends $37,000 $52,000 A. Munich has a target dividend payout of 40 percent of net income. Based on the 2010 financial statements relationships, estimate the sustainable sales growth rate for the Munich Corporation for 2011.B. Show how your answer in Part A would change if Munich decided not to pay any dividends in 2011.C. Assume the Munich Corporation wants to grow its sales by 40 percent in 2011 over its 2010 level. Estimate the additional funds needed that will be necessary to support this rapid increase in sales.D. Sales are forecasted to increase an additional 20 percent in 2012 over 2011. Estimate the two-year AFN that the Munich Corporation will need to finance its 2011 and 2012 sales growth plans.

Sustainable Sales Growth Rates and Additional Funds Needed-Following are two years of income statements and balance sheets for the Munich Exports Corporation. MUNICH EXPORTS CORPORATION 2009 2010 Cash...

Sustainable Sales Growth Rates and Additional Funds Needed-Following are two years of income statements and balance sheets for the Munich Exports Corporation.

MUNICH EXPORTS CORPORATION
	2009	2010
Cash	$50,000	$50,000
Accounts receivable	200,000	300,000
Inventories	450,000	570,000
Total current assets	700,000	920,000
Fixed assets, net	300,000	380,000
Total assets	$1,000,000	$1,300,000
Accounts payable	$130,000	$180,000
Accruals	50,000	70,000
Bank loan	90,000	90,000
Total current liabilities	270,000	340,000
Long-term debt	400,000	550,000
Common stock ($0.05 par)	50,000	50,000
Additional paid-in-capital	200,000	200,000
Retained earnings	80,000	160,000
Total liabilities and equity	$1,000,000	$1,300,000
Net sales	$1,300,000	$1,600,000
Cost of goods sold	780,000	960,000
Gross profit	520,000	640,000
Marketing	130,000	160,000
General and administrative	150,000	150,000
Depreciation	40,000	55,000
EBIT	$200,000	$275,000
Interest	45,000	55,000
Earnings before taxes	155,000	220,000
Income taxes (40% rate)	62,000	88,000
Net income	$93,000	$132,000
Cash dividends	$37,000	$52,000

A. Munich has a target dividend payout of 40 percent of net income. Based on the 2010 financial statements relationships, estimate the sustainable sales growth rate for the Munich Corporation for 2011.

B. Show how your answer in Part A would change if Munich decided not to pay any dividends in 2011.

C. Assume the Munich Corporation wants to grow its sales by 40 percent in 2011 over its 2010 level. Estimate the additional funds needed that will be necessary to support this rapid increase in sales.

D. Sales are forecasted to increase an additional 20 percent in 2012 over 2011. Estimate the two-year AFN that the Munich Corporation will need to finance its 2011 and 2012 sales growth plans.

May 25, 2022

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Sustainable Sales Growth Rates and Additional Funds Needed-Following are two years of income statements and balance sheets for the Munich Exports Corporation. MUNICH EXPORTS CORPORATION 2009 2010 Cash...

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