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AutoSave on H2U v Quiz 4 - Word O Search Issac Arias A ? File Home Insert Draw Design Layout References Mailings Review View Help Share Comments 2

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AutoSave on H2U v Quiz 4 - Word O Search Issac Arias A ? File Home Insert Draw Design Layout References Mailings Review View Help Share Comments 2. Percentage of Sales Approach (30 points) The assets and current liabilities of Firm A vary in direct proportion to sales. The cureat sales are $2000 and we can expect them to increase by 20% next year. Net Income is projected to at 5% of sales. The firm is not planning on issuing any more common stock bor paying dividends. Current W of sales Projected 46 Cash Accounts receivable Inventory Fixed assets Total assets 5120 $500 $840 $2,600 96 $1.060 46 Accounts payable $600 Long-term debt_ $700 46 Common stock and surplus $1,000 96 Retained earnings $1.760 46 Total liabilities and equity $4,060 96 hint: I. Find the % of current sales for the items that vary with sales 2. Find the new sales based on growth rate 3. Find the projected sales for items that vary with sales (% of sales tnew sales) 4. Fond debt and exity items . Common stock remains the same • Net Income is added to RE Long-term debt will increase (since no common stock will be issued) by the amount needed to make the balance sheer balance. 3. External Financing and Growth (40 points) a) A firm has net income of S6CXO and total assets of S30,000. The dividend payout ratio is 40%. What is the internal growth rate? b) A firm has a net income of 52000 pays S400 in dividends. Its tolal equity is $3000. What is the sustainable growth rate? Page 2 of 3 338 words X Focus BE Te + 79% Type here to search O W 4 12:18 PM 9/23/2020 21