Please see the attached problem.
EFN: The most recent financial statements for Martin, Inc., are shown here:
INCOME STATEMENT BALANCE SHEET
Sales $19,200 Assets $93,000 Debt $20,400
Costs $15550 Equity $72,600
Taxable income $ 3,650 Total $93,000 Total $93,000
Taxes (34%) 1,241
Net income $2,409
Assets and costs are proportional to sales. Debt and equity are not. A dividend of $963.60 was paid, and Martin wishes to maintain a constant payout ratio. Next year's sales are projected to be $23,040. What is the external financing needed?© BrainMass Inc. brainmass.com June 21, 2018, 8:02 am ad1c9bdddf
See the attached spreadsheet. I've worked step by step to try to explain how this works.
Basically, you'll see that the EFN formula is as follows:
EFN=(Expected Total Assets)-(Expected Total Liabilities)
Expected total assets are easy to calculate as they are said to be a constant percentage of sales.
Last year, sales were $19,200 and assets ...
External funds needed by a firm are calculated based upon the given financials (income statement and balance sheet).