The most recent financial statements for REM Co. are shown below:
Net Income 150
Assets and costs are proportional to sales. Debt is not. A dividend of $90 was paid, and REM wishes to maintain a constant payout to net income. Next year's sales are projected to be $480. What is external funds need (EFN)?
The basis formula for external funds needed (also called "additional funds needed") is:
EFN = ((Assets which rise ...
This solution illustrates how to compute the external (additional) funds needed to fuel sales growth.