What external financing is needed to support the growth rate

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Reference no: EM132070013

The most recent financial statements for Fleury Inc., follow. Sales for 2015 are projected to grow by 25 percent. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, fixed assets and accounts payable increase spontaneously with sales.

FLEURY, INC. 2014 Income Statement
Sales			$	744,000
Costs				579,000
Other expenses				15,000

Earnings before interest and taxes			$	150,000
Interest paid				11,000

Taxable income			$	139,000
Taxes (20%)				27,800

Net income			$	111,200

Dividends	$	22,240
Addition to retained earnings		88,960

FLEURY, INC. Balance Sheet as of December 31, 2014
Assets			Liabilities and Owners' Equity
Current assets			Current liabilities
Cash	$	20,340	Accounts payable	$	54,500
Accounts receivable		32,660	Notes payable		13,700

Inventory		69,620	Total	$	68,200

Total	$	122,620	Long-term debt	$	127,000
Fixed assets			Owners' equity
Net plant and equipment	$	420,000	Common stock and paid-in surplus	$	113,000
			Retained earnings		234,420

			Total	$	347,420

Total assets	$	542,620	Total liabilities and owners' equity	$	542,620

If the firm is operating at full capacity and no new debt or equity is issued, what external financing is needed to support the 25 percent growth rate in sales? (Do not round intermediate calculations.)

Reference no: EM132070013

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