The most recent financial statements for Last in Line, Inc. are shown here: Assets and costs are proportional to sales. Debt and equity are not. A dividend of $992 was paid, and the company wishes to maintain a constant payout ratio. Next year's sales are projected to be $21,830. What is the amount of the external financing need?

Question

The most recent financial statements for Last in Line, Inc. are shown here:  Assets and costs are proportional to sales. Debt and equity are not. A dividend of $992 was paid, and the company wishes to maintain a constant payout ratio. Next year's sales are projected to be $21,830. What is the amount of the external financing need?

Quizplus · Accepted Answer

Sales increase = ($21,830 - $18,500)/$18,500 = 0.18 External financing need = $105,622 - $91,265 = $14,357

The Most Recent Financial Statements for Last in Line, Inc