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    new funds required to finance the growth

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    Owen's Electronics has 90 operating plants in seven southwestern states. Sales
    for last year were $100 million, and the balance sheet at year-end is similar in
    percentage of sales to that of previous years (and this will continue in the future).
    All assets (including fixed assets) and current liabilities will vary directly with sales.

    BALANCE SHEET
    (in $ millions)
    Assets Liabilities and Stockholders' Equity
    Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2
    Accounts payable . . . . . . . . . . . . . . . . $15
    Accounts receivable . . . . . . . . . . . . . . . 20
    Accrued wages . . . . . . . . . . . . . . . . . . 2
    Inventory . . . . . . . . . . . . . . . . . . . . . . . 23
    Accrued taxes . . . . . . . . . . . . . . . . . . . 8
    Current assets . . . . . . . . . . . . . . . . . . . $45
    Current liabilities . . . . . . . . . . . . . . . $25
    Fixed assets . . . . . . . . . . . . . . . . . . . . . 40
    Notes payable . . . . . . . . . . . . . . . . . . . 10
    Common stock . . . . . . . . . . . . . . . . . . 15
    Retained earnings . . . . . . . . . . . . . . . . 35
    Total liabilities and Total assets . . . . . . . . . . . . . . . . . . . . . $85
    stockholders' equity . . . . . . . . . . . . . $85

    Owen's has an after-tax profit mar gin of 7 percent and a dividend payout ratio
    of 40 percent. If sales grow by 10 percent next year, determine how many dollars of new funds are needed to finance the growth.

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    https://brainmass.com/business/finance/new-funds-required-to-finance-the-growth-44892

    Solution Preview

    Owen's Electronics has 90 operating plants in seven southwestern states. Sales
    for last year were $100 million, and the balance sheet at year-end is similar in
    percentage of sales to that of previous years (and this will continue in the future).
    All assets (including fixed assets) and current liabilities will vary directly with sales.

    BALANCE SHEET
    (in $ ...

    Solution Summary

    Computation of new funds required to finance the growth

    $2.19

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