RETRO MACHINE, INC.Balance Sheet as of December 31, 2020AssetsLiabilities and Owners' EquityCurrent assetsCurrent liabilities$ 21,94044,880CashAccounts payableNotes payable$56,10015,300Accounts receivableInventory104,960Total$ 71,400Total$ 171,780 Long-term debt$ 143,000Fixed assetsOwners' equityCommon stock and paid-insurplusRetained earningsNet plant andequipment$436,000$ 121,000272,380Total$393,380Total liabilities and owners'equityTotal assets$ 607,780$ 607,780If the firm is operating at full capacity and no new debt or equity is issued, what is theexternal financing needed to support the 25 percent growth rate in sales? (Do not roundintermediate calculations.)EFN The most recent financial statements for Retro Machine, Inc., follow. Sales for 2021 areprojected to grow by 25 percent. Interest expense will remain constant; the tax rate andthe dividend payout rate will also remain constant. Costs, other expenses, currentassets, fixed assets, and accounts payable increase spontaneously with sales.RETRO MACHINE, INC.2020 Income StatementSalesCosts$760,000595,00031,000Other expensesEarnings before interestand taxesInterest paid$ 134,00027,000Taxable income$ 107,00023,540Taxes (22%)Net income$ 83,460Dividends$25,038Addition to retained58,422earnings

External financing is needed for growth and expansion of the firm.

Answered: Balance Sheet as of December 31, 2020…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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