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13 July, 08:24

Assume that Delalo, Inc. is operating at full capacity. Also assume that assets, costs, and current liabilities vary directly with sales. The dividend payout ratio is constant. What is the external financing needed if sales increase by 10 percent?

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Answers (2)
  1. 13 July, 08:32
    0
    External Financing Needed (EFN) = $616.36

    Explanation:

    This question didn't give full information of the balance sheet.

    The following are needed to find find the EFN:

    - Sales

    -Income

    -Taxable Income

    -Net Income

    -Taxes

    Nevertheless, here is the calculation:

    External financing needed =

    (1.10*$12,470) - (1.10 * $1330) - $3200-$4600 - ($2,840 + ($45*1.10) = $616. 36
  2. 13 July, 12:09
    0
    External financing needed =

    (1.10*$12,470) - (1.10 * $1330) - $3200-$4600 - ($2,840 + ($45*1.10) = $616. 36.

    The need for external financing is intermediate.
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