Determine the additional funds needed

Assignment Help Financial Management

Reference no: EM131996397

Stevens Textile's 2013 financial statements are shown below:

Balance Sheet as of December 31, 2013 (Thousands of Dollars)

Cash	$ 1,080	Accounts payable	$ 4,320
Receivables	6,480	Accruals	2,880
Inventories	9,000	Line of credit	0
Total current assets	$16,560	Notes payable	2,100
Net fixed assets	12,600	Total current liabilities	$ 9,300
		Mortgage bonds	3,500
		Common stock	3,500
		Retained earnings	12,860
Total assets	$29,160	Total liabilities and equity	$29,160

Income Statement for December 31, 2013 (Thousands of Dollars)

Sales	$36,000
Operating costs	32,440
Earnings before interest and taxes	$ 3,560
Interest	460
Pre-tax earnings	$ 3,100
Taxes (40%)	1,240
Net income	$ 1,860
Dividends (45%)	$ 837
Addition to retained earnings	$ 1,023

Suppose 2014 sales are projected to increase by 25% over 2013 sales. Use the forecasted financial statement method to forecast a balance sheet and income statement for December 31, 2014.

The interest rate on all debt is 6%, and cash earns no interest income. Assume that all additional debt in the form of a line of credit is added at the end of the year, which means that you should base the forecasted interest expense on the balance of debt at the beginning of the year. Use the forecasted income statement to determine the addition to retained earnings.

Assume that the company was operating at full capacity in 2013, that it cannot sell off any of its fixed assets, and that any required financing will be borrowed as notes payable.

Also, assume that assets, spontaneous liabilities, and operating costs are expected to increase by the same percentage as sales.

Determine the additional funds needed. Round your answers to the nearest dollar. Do not round intermediate calculations.

Total assets $
AFN $

Reference no: EM131996397

Questions Cloud

What are stewarts current business operating cycle : Stewart and Company currently has a production cycle of 40 days, a collection cycle of 20 days and a payment cycle of 15 days.

What was the cost of goods sold for the month : The beginning finished goods inventory was $17,000 and the ending finished goods inventory was $14,000. What was the cost of goods sold for the month

Estimate the companys cost of equity : If the stock sells for $43 per share, what is your best estimate of the company's cost of equity?

Compute the portfolio weights : A stock has a beta of 1.31 and an expected return of 12.9 percent. A risk-free asset currently earns 4.35 percent.

Determine the additional funds needed : Assume that assets, spontaneous liabilities, and operating costs are expected to increase by the same percentage as sales.

What is the sampling distribution of the mean : (a) What is the sampling distribution of the mean? You should give a brief explanation of your answer.

What if the market capitalization rate for stock c is 9 : If the market capitalization rate for each stock is 12.00%, what is the stock price of Stock C? What if the market capitalization rate for Stock C is 9.00%?

Probability a student is a sophomore : The probability a student is a sophomore and is not satisfied = round to three decimal places.

What is your best estimate of the companys cost of equity : Stock in Country Road Industries has a beta of 0.89. The market risk premium is 9.5 percent, and T-bills are currently yielding 4.5 percent.

User Account

All Pages