Purchase Solution

External Financing - Cobb Tie Shops, Inc., expects sales next year to be $300,000

Not what you're looking for?

Ask Custom Question

Cobb Tie Shops, Inc., expects sales next year to be $300,000. Inventory and accounts receivable will increase $60,000 to accommodate this sales level. The company has a steady profit margin of 10 percent with a 30 percent dividend payout. How much external financing will the firm have to seek? Assume there is no increase in liabilities other than that which will occur with the external financing.

Purchase this Solution
Solution Summary

This solution calculates external financing required, given an increase in assets and liabilities to support an increase in sales.

Solution Preview

Sales= $300,000
Profit @ 10%= $30,000
Dividend paid @ 30 %= $9,000 ...

Purchase this Solution
Free BrainMass Quizzes
Team Development Strategies

This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.

Academic Reading and Writing: Critical Thinking

Importance of Critical Thinking

Lean your Process

This quiz will help you understand the basic concepts of Lean.

Understanding Management

This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.

IPOs

This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)

View More Free Quizzes
Related BrainMass Solutions

  • External Financing - Cobb Tie Shops

    169605 External Financing - Cobb Tie Shops Cobb Tie Shops expects sales next year to be $300,000. Inventory and accounts receivable will increase by $60,000 to accommodate this sales level.

  • Balance Sheet and Forecasting Calculations

    The company expects net income during the next year to equal $400,000. Over the past several years, the company has been paying $50,000 in dividends to its stockholders. The company expects to continue this policy for at least the next year.

  • External Financing / Net Present Value of Project

    231067 External Financing / Net Present Value of Project Frisch Fish Corporation expects net income next year to be $600000. Inventory and accounts receivable will have to be increased by $300000 to accommodate this sales level.

  • Use debt or equity for better ROE

    She also expects these new shops to generate an additional $1 million in sales. Assuming a 40 percent tax rate and no other changes, should Jenny buy the two coffeehouses? Why or why not? Which financing option results in the better ROE?

  • External Financing

    53683 External financing Question Company X expects sales next year = $5,000,000. Inventory and accounts receivable will increase $900,000 to accommodate this sales level.

  • 1. The Hartnett Corporation manufactures baseballs bats with

    What is the expected level of sales for next year? 5. Axle Supply Co. Expects sales next year to be $300,000. Inventory and receivable will increase by $60,000 to accommodate this sales levels.

  • Additional Financing Needed With Nonproportionate Increase

    492136 Additional Financing Needed With Nonproportionate Increase ICU has current assets of $800,000 and net fixed assets of $1,400,000. The firm expects its sales to climb 25 percent next year from its current level of $3,500,000.

  • Financing Needs for Baldwin Products

    Next year, ARI plans to pay dividends of $1 million, up from $500,000 this year. ARI's marginal tax rate is 34 percent. How much external financing does ARI require next year? 10.

  • Question about Change in ROE

    303437 Question about Change in ROE Quigley Inc. is considering two financial plans for the coming year. Management expects sales to be $300,000, operating costs to be $265,000, assets to be $200,000, and its tax rate to be 35%.

View More Related Solutions