cesCurrent assetsCashAccounts receivableInventoryTotalFixed assetsNet plant andequipmentTotal assetsSCOTT, INC.Balance Sheet as of December 31, 2019AssetsEFN$ 297,654Current liabilitiesAccounts payableNotes payable102,960Total$169,380 Long-term debtOwners' equityCommon stock and paid-insurplus21,74044,680$434,000Liabilities and Owners' Equity$603,380Retained earningsTotalTotal liabilities and owners'equity$ 55,90015,100$ 71,000$ 141,000$120,000271,380$ 391,380If the firm is operating at full capacity and no new debt or equity is issued, what externalfinancing is needed to support the 30 percent growth rate in sales? (Do not roundintermediate calculations.)$603,380 The most recent financial statements for Scott, Inc., appear below. Sales for 2020 areprojected to grow by 30 percent. Interest expense will remain constant; the tax rate andthe dividend payout rate also will remain constant. Costs, other expenses, currentassets, fixed assets, and accounts payable increase spontaneously with sales.SCOTT, INC.2019 Income StatementSalesCostsOther expensesEarnings before interestand taxesInterest expenseTaxable incomeTaxes (25%)Net incomeDividendsAddition to retainedearnings$24,97558,275$758,000593,00029,000$ 136,00025,000$ 111,00027,750$ 83,250

External funding required is the amount of finance needed in the form of debt or equity to increase…

assets, fixed assets, and accounts payable increase spontaneously with sales. SCOTT, INC. 2019 Income Statement Sales Costs Other expenses Earnings before interest and taxes Interest expense Taxable income Taxes (25%) Net income $758,000 593,000 29,000 $ 136,000 25,000 $ 111,000 27,750 $ 83,250

assets, fixed assets, and accounts payable increase spontaneously with sales. SCOTT, INC. 2019 Income Statement Sales Costs Other expenses Earnings before interest and taxes Interest expense Taxable income Taxes (25%) Net income $758,000 593,000 29,000 $ 136,000 25,000 $ 111,000 27,750 $ 83,250

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter6: Accounting For Financial Management

Section: Chapter Questions

Problem 12P

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