The 2017 financial statements for Growth Industries are presented below. INCOME STATEMENT, 2017 Sales $ 240,000 Costs 170,000 EBIT $ 70,000 Interest expense 14,000 Taxable income $ 56,000 Taxes (at 35%) 19,600 Net income $ 36,400 Dividends $ 18,200 Addition to retained earnings 18,200 BALANCE...

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Finance

The 2017 financial statements for Growth Industries arepresented below.
INCOME STATEMENT, 2017
Sales $ 240,000
Costs 170,000
EBIT $ 70,000
Interestexpense 14,000
Taxableincome $ 56,000
Taxes (at35%) 19,600
Net income $ 36,400
Dividends $ 18,200
Addition toretained earnings 18,200

BALANCE SHEET, YEAR-END, 2017
Assets Liabilities
Currentassets Currentliabilities
Cash $ 7,000 Accountspayable $ 14,000
Accountsreceivable 12,000 Total currentliabilities $ 14,000
Inventories 21,000 Long-termdebt 140,000
Total currentassets $ 40,000 Stockholders’equity
Net plant andequipment 180,000 Common stockplus additional paid-in capital 15,000
Retainedearnings 51,000
Totalassets $ 220,000 Totalliabilities and stockholders' equity $ 220,000

Sales and costs are projected to grow at 30% a year for at leastthe next 4 years. Both current assets and accounts payable areprojected to rise in proportion to sales. The firm is currentlyoperating at 75% capacity, so it plans to increase fixed assets inproportion to sales. Interest expense will equal 10% of long-termdebt outstanding at the start of the year. The firm will maintain adividend payout ratio of 0.50.
What is the required external financing over the next year?(Enter excess cash as a negative number with a minussign.)

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As a first step we will have to caste the projected income statement for the year 2018 Please see the table below Please be guided by the last column titled How it has been calculated to understand the mathematics All financials are in Projected Income Statement 2018 How it has been calculated Sales 312000 240000 x 1 30 Costs 221000 170000 x 1 30 EBIT 91000 Sales Costs Interest expense 14000 10 of longterm debt outstanding at the start of the See Answer

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The 2017 financial statements for Growth Industries arepresented below.INCOME STATEMENT, 2017Sales$240,000Costs170,000EBIT$70,000Interestexpense14,000Taxableincome$56,000Taxes (at35%)19,600Net income$36,400Dividends$18,200Addition toretained earnings18,200 BALANCE SHEET, YEAR-END, 2017AssetsLiabilitiesCurrentassetsCurrentliabilitiesCash$7,000Accountspayable$14,000Accountsreceivable12,000Total currentliabilities$14,000Inventories21,000Long-termdebt140,000Total currentassets$40,000Stockholders’equityNet plant andequipment180,000Common stockplus additional paid-in capital15,000Retainedearnings51,000Totalassets$220,000Totalliabilities and stockholders' equity$220,000 Sales and costs are projected to grow at 30% a year for at leastthe next 4 years. Both current assets and accounts payable areprojected to rise in proportion to sales. The firm is currentlyoperating at 75% capacity, so it plans to increase fixed assets inproportion to sales. Interest expense will equal 10% of long-termdebt outstanding at the start of the year. The firm will maintain adividend payout ratio of 0.50.What is the required external financing over the next year?(Enter excess cash as a negative number with a minussign.)

INCOME STATEMENT, 2017
Sales			$	240,000
Costs				170,000
EBIT			$	70,000
Interestexpense				14,000
Taxableincome			$	56,000
Taxes (at35%)				19,600
Net income			$	36,400
Dividends	$	18,200
Addition toretained earnings		18,200

BALANCE SHEET, YEAR-END, 2017
Assets			Liabilities
Currentassets			Currentliabilities
Cash	$	7,000	Accountspayable	$	14,000
Accountsreceivable		12,000	Total currentliabilities	$	14,000
Inventories		21,000	Long-termdebt		140,000
Total currentassets	$	40,000	Stockholders’equity
Net plant andequipment		180,000	Common stockplus additional paid-in capital		15,000
			Retainedearnings		51,000
Totalassets	$	220,000	Totalliabilities and stockholders' equity	$	220,000