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 _______________________________________

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
     


  Taxable income     $ 4,796,700
  Taxes       1,678,845
     


  Net income     $ 3,117,855
     




  Dividends $ 1,247,142    
  Addition to retained earnings   1,870,713    

 

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          
 


         
          Common stock $ 5,924,750  
          Accumulated retained earnings   13,354,000  
         


 
          Total equity $ 19,278,750  
         


 
  Total assets $ 26,712,000     Total liabilities and equity $ 26,712,000  
 




   




 

 

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]    
 

  Common stock $ [removed]
      Accumulated retained earnings [removed]
     

      Total equity [removed]
     

  Total assets $ [removed]   Total liabilities and equity $ [removed]
 


 



 

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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