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    External Financing: Percentage Sales Method

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    Given the compressed version of balance sheet and income statement, estimate the amount of external financing needed to increase sales by 20% next year (use percentage of sales method).

    (Dividend payout is 50%)
    Balance Sheet (End of the Year)
    Assets $2,000 Debt $1000
    Equity $1000
    Total $2000 $2000
    Income Statement
    Sales $1000
    Costs 800
    Net Income 200.

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    https://brainmass.com/economics/finance/external-financing-percentage-sales-method-268981

    Solution Preview

    External financing requirement = [(total assets/sales) x change in sales] - ...

    Solution Summary

    Percentage Sales Method is expressed in the solution.

    $2.49

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