Given the following information: assets = $900; accounts payable = $110; notes payable = $100; long-term debt = $150; equity = $540; sales = $450; costs = $400; tax rate = 34%; dividends = $16.
50) Costs, assets, and accounts payable maintain a constant ratio to sales. How much external
ﬁnancing is needed if sales increase 15% and the dividend payout ratio is constant?

Question

Quizplus · Accepted Answer

To find the external financing needed, calculate the increase in assets and accounts payable due to the 15% sales increase, then determine the increase in retained earnings. The difference between the increase in assets and the sum of the increase in liabilities and retained earnings gives the external financing needed.

Given the Following Information: Assets = $900; Accounts Payable =