| The Optical Scam Company has forecast a sales growth rate of 20 percent for next year. The current financial statements are shown here: |
| Income Statement | ||||
| Sales | $ | 31,800,000 | ||
| Costs | 27,003,300 | |||
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| Taxable income | $ | 4,796,700 | ||
| Taxes | 1,678,845 | |||
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| Net income | $ | 3,117,855 | ||
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| Dividends | $ | 1,247,142 | ||
| Addition to retained earnings | 1,870,713 | |||
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| Balance Sheet | |||||||
| Assets | Liabilities and Equity | ||||||
| Current assets | $ | 7,340,000 | Short-term debt | $ | 5,088,000 | ||
| Long-term debt | 2,345,250 | ||||||
| Fixed assets | 19,372,000 | ||||||
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| Common stock | $ | 5,924,750 | |||||
| Accumulated retained earnings | 13,354,000 | ||||||
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| Total equity | $ | 19,278,750 | |||||
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| Total assets | $ | 26,712,000 | Total liabilities and equity | $ | 26,712,000 | ||
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| a. | Calculate the external financing needed for next year. (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) |
| External financing needed | $ [removed] |
| b-1. | Prepare the firm’s pro forma balance sheet for next year. (Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.) |
| Balance Sheet | |||
| Assets | Liabilities and equity | ||
| Current assets | $ [removed] | Short-term debt | $ [removed] |
| Long-term debt | [removed] | ||
| Fixed assets | [removed] | ||
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Common stock | $ [removed] | |
| Accumulated retained earnings | [removed] | ||
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| Total equity | [removed] | ||
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| Total assets | $ [removed] | Total liabilities and equity | $ [removed] |
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| b-2. | Calculate the external financing needed. (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) |
| External financing needed | $ [removed] |
| c. | Calculate the sustainable growth rate for the company based on the current financial statements. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
| Sustainable growth rate | [removed] % |
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