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Percentage of Sales

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Using Percentage of Sales. The 2003 financial statements for Growth Industries are presented below. Sales and costs in 2004 are projected to be 20 percent higher than in 2003. Both curent assets and accounts payable are projected to rise in proportion to sales. The firm is currently operating at full capacity, so it plans to increase fixed assets in proprtion to sales. What external financing will be required by the firm? Interest expense in 2004 will equal 10 percent of long-term debt outstsanding at the start of the year. The firm will maintain a dividend payout ration of .40.

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Forecasted total Liabilities are noted.

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INCOME STATEMENT 2003 Forecasted
Sales $200,000 $240,000.0
Costs 150,000 $180,000.0
EBIT 50,000 $60,000.0
Interest expense 10,000 10000
Taxable income 40,000 $50,000.0
Taxes (at ...

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