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Green Lumber has - Total sales of $387,200, - Total assets of $429,600, - Current liabilities...

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Finance

Green Lumber has - Total sales of $387,200, - Total assets of$429,600, - Current liabilities of $45,000, - Dividends paid of$24,000, - Net income of $57,700.

Assume that all costs, assets, and current liabilities changespontaneously with sales. The tax rate and dividend payout ratiosremain constant. Assume the firm is currently operating at fullcapacity.

If the firm's managers project a firm growth rate of 12 percentfor next year, what will be the amount of external financing neededto support this level of growth?

Answer & Explanation Solved by verified expert
4.5 Ratings (962 Votes)
Answer Projected Increase in Assets Assets Sales Growth Rate Projected Increase in Assets 429600 12 Projected Increase in Assets 51552 Spontaneous Increase in Current Liabilities Current    See Answer
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Green Lumber has - Total sales of $387,200, - Total assets of$429,600, - Current liabilities of $45,000, - Dividends paid of$24,000, - Net income of $57,700.Assume that all costs, assets, and current liabilities changespontaneously with sales. The tax rate and dividend payout ratiosremain constant. Assume the firm is currently operating at fullcapacity.If the firm's managers project a firm growth rate of 12 percentfor next year, what will be the amount of external financing neededto support this level of growth?

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